During the late 2000, economies in the US and other parts of the world suffered from a financial crisis and recession. If there’s one good that this crisis brought about, it’s none other than the fact that small businesses bloomed. Being employed by a multimillion dollar company does not necessarily exempt you from job loss, a demotion or a layoff.
Even if you receive a benefits package from being separated from the company, it would still not ensure a good source of living until the time that you find employment again. This is precisely the reason why there are individuals who would rather take the risk of launching their own business, rather than rely on the higher-ups of a corporation for a source of living.
If you belong to the group of people who would like to start their very own business, you are already on the right track. Starting an entrepreneurship means that you are taking charge of your own financial life. Just remember that challenges would also present themselves as you try to build your business from the ground up, especially when it comes to the financial aspect of running things.
Here, we will give you an idea about how you can save money when starting a business – from the time that you are setting things up to when you are already running the day-to-day operations.
Starting the Business from the Ground Up
When starting your own business, make sure that the industry is something that you are truly interested in. Having a knack for organizing is also something that you need, along with leadership skills and a good head for business.
Next, you should arm yourself with as much information as you can about the industry you’re in. It also pays to be aware of a few things, such as the reasons why most start-up companies fail. According to financial experts, the top two reasons why most businesses fail include:
- Insufficient capital
- Excessive cost overruns
As you can see, both of these reasons are finance-related. So how can you prevent your business from going down the drain even before it starts? The number one rule is to use the capital that you have very wisely. Start small. It’s perfectly fine to be passionate about starting your own business, but you need to be realistic about the financial aspect of it as well.
Here are a few quick tips on how you can start small when establishing a business from the ground up:
Be careful about how you spend your start-up capital
To save money when starting your own business, the number one rule is to be careful about how you spend your start-up capital. How much do you need to spend to get the business off the ground? Based on your business plan, how long would the business need to run before you can start realizing your profits minus the capital investment?
Again, starting small is key here. You would not want to take any more than what your capital can actually handle, and make the newbie mistake of letting the company fall before it even gets off the ground due to bad financial decisions. When you start small and work your way up, you can achieve your goals right away. Expansion can always wait, and it should be done only after you start making some real profit.
Don’t lavishly spend on marketing materials
A few generations back, business owners had to rely on word-of-mouth marketing, printed marketing materials or TV/radio ads to spread the word about their brand. Television and radio ads are expensive and not target market-specific, while printed materials were expensive back then. Entrepreneurs today are lucky in the sense that they can easily use the accessibility of the Internet to make people aware that their products do exist.
The fun part of starting a business is creating logos, letterheads, business cards, etc. – but make sure that you are not spending too much money on these. The business card that you will print out today may become obsolete after a few months, especially if you vary the type of service or product that you introduce to your clients.
Ditch the fancy office/office furniture/equipment
Do you really need to rent a commercial space in order to get your business off the ground? If you can, start up a company right in your very own home. Do not spend too much money on fancy office furniture and equipment – you can always buy these later.
Use cash whenever possible
There might be a few lucky individuals who started and eventually succeeded in building a business purely on credit, but this rarely happens. If you want to start a small business, use cash whenever possible. Look for vendors or suppliers who will give you even small discounts when paying cash – every cent that you can save will eventually add up.
If you need extra manpower, hire interns
For a minimal fee, you can hire interns who are hungry and eager to learn. They’re willing to work extra hours, they are adept at using technology, and they can easily learn about trends and existing systems. If you realize that you have extra workload during certain months of the year, hiring interns will give you the best bang for your buck.
Making Your Business Known
Once your business has gotten off the ground, the next thing that you need to work on is spreading the word about your brand. Here are some ways on how you can make your business known without having to spend thousands of dollars on TV commercials or similar types of ad campaigns:
If you must produce printed advertising materials, piggyback it with another business owner
If you have a brick-and-mortar store which has a slew of clients focused within a community, printed advertising might still be better than online advertising.
If you must produce printed ad materials, piggyback it with other promotional materials. For example, if you are sending out invoices and you are about to launch a new product, mail all the materials together to save on postage stamps. When you have customers buying stuff from your store, you can tuck in newsletters, coupons and other promotional materials on their bag of purchases.
Take full advantage of online advertising
No modern business owner should be without a website. Did you know that there are some customers who do not think that a company is legitimate if there is no official website? Aside from ‘legalizing’ your business in the eyes of your target market, having a website is also the cheapest and most effective way to advertise your brand.
You can run the website as an online store which accepts orders and processes payments. You can incorporate a blog on your website to reach out to your target audience.
You can also use the site to update people about the latest products or services that you have. Basically, you can use your website as a one-stop-shop for all your advertising needs. Once your site starts generating lots of traffic, it equates to more profits for your business.
Rule over social media
More than that, you can have direct access to your customers’ point of view so that they can give you instant feedback. The information you will get will help towards the further improvement of your products or services.
Saving on Operational Expenses
Lastly, how can you save on the operational expenses if you are running a small business? Being on a shoestring budget might mean that you have to scrimp on certain things, but there’s no need for you to let the efficiency of the business suffer. Once you put together all the cents and dollars that you are saving on a daily basis, that would amount to a lot eventually.
If you are joining a trade show, for example, and you need to have a life-sized poster printed out for the event. You can split the costs with a neighboring business owner. If you’re an expert in a certain aspect of the industry, you can offer your services to speak at certain events. This will help spread the word about your business.
As mentioned earlier, you don’t need to have a lavish office to start a small business – even a home office setup would do. Purchase your office furniture and equipment from second hand stores, and the supplies you need from thrift stores. Check with your local trade associations if there are competitive group insurance packages that you can start paying so that you can save money on premiums.
If there are certain months of the year when business is slow, maintain only the number of employees needed to run the company on a daily basis. Only hire additional temporary employees when there is a surge in the number of clients that you have. Instead of having a permanent team of marketers, use an independent sales team who will earn a commission for every product or service that they sell.
There are plenty of ways to save money when starting a business. Once you manage to get it off the ground, all you have to do is stick to your plan to make the business flourish.