Many entrepreneurs make the mistake of putting the concept of saving on the back burner. This is understandable since most startups need to spend a lot of their time running their new business. Here are 10 ways new entrepreneurs can save money when starting a new business.
However, running out of funds is one of the major reasons why startups fail. According to a report by National Business Capital, startup failure rates continue to hover at 90%.
With profits few and far between for most starters, being able to save becomes particularly crucial when starting out. So if you want to succeed as an entrepreneur that has to deal with a tight budget, you need to know how you can cope during the first few years while growing your revenue.
Here are 10 ways new entrepreneurs can save money when starting a new business:
1. Start by Working Remotely
One of the most substantial costs you’ll need to deal with as a startup is paying for a physical office. There are many factors in this such as paying for office leasing, transportation, utilities, maintenance, and office supplies.
However, there are many software solutions out there specifically designed for remote work, and many startups have implemented them to their success. These businesses have shown that you can operate a startup even without a traditional office, and save on costs as a result.
2. Leverage Free Solutions As Much As Possible
One of the best ways to save as an entrepreneur is to leverage free solutions. There are many tools available right now that offer free trials or accounts that you can use indefinitely, albeit with limited features.
Some examples include:
- Using open-source applications
- Social advertising using free channels
Along with this, some solutions are naturally free unless you decide to invest in them. If you count on using word-of-mouth marketing, for example, you can encourage your employees to share the business with their family and friends.
3. Avoid Scaling Too Quickly
Investing in too many experts, business locations, and other activities in pursuit of expansion can result in losing focus, significant spending, and lost customers. Your whole company can collapse without proper support.
What you should do instead is to focus on making sustainable choices and strengthening the process you already have. Only work on acquiring new customers and expanding your operations only when you have the means to do so.
4. Be Smart When Hiring Staff
Besides considering working remotely, taking advantage of free solutions, and avoiding scaling too fast, you also should practice the art of smart hiring. Another major expense for any company comes in the form of salaries and benefits for your employees.
You want to keep a small team at first and hire people who can take on multiple roles at once. You shouldn’t shy away from freelancers and contractors as well since these experts can help you cut costs compared to traditional W2 employees.
5. Stay On Top of Your Cash Flow
Having a simple accounting app to help you get daily reports on your business cash flow can show you how much money is coming in and out of your company.
Downloading these helpful apps can keep your expenses organized.
6. Don’t Get Custom Software Yet
Getting custom software for your startup can be tempting. Unfortunately, investing in a custom solution early on will likely cause your business to incur more costs than necessary. As your processes evolve and the number of employees you have increases, these processes will change — and with it, the custom software you need changes, as well.
Instead, wait and see if your business really needs custom solutions. Leverage and test the current solutions out there before investing in something you may change later.
7. Shop Around for the Best Prices
Always look for the best prices when it comes to goods and services. Whether you’re buying furniture, office equipment, or software, check multiple stores to make sure you’re getting the best prices. You can also check couponing sites and other resources so you can use discount codes and buy items when they’re on sale.
8. Get Perks from Major Companies
Sometimes it’s possible to get help from larger companies that support startups. Some examples of these include Google Cloud startup credits and the startup solutions for Amazon Web Services.
9. Test Your Marketing Before You Spend
Marketing takes time, money, and effort to perfect so it’s only reasonable that you test your campaigns out before you implement them. Run a few smaller campaigns first, and based on their performance, you can see which ones are worth spending more on.
10. Keep Your Day Job
Most startup entrepreneurs can’t pay themselves a salary when starting out. As much as possible, try to keep your existing job so you have enough funds to continue working before your bottom line improves.
Entrepreneurs may have a tight budget when starting out, but by following the tips above, you will have sufficient funds at times when you need them the most.
Of course, along with needing to manage your business finances, you also need to have the right personal finance plan in place. If you are having trouble with your personal finances, then we have the solutions for you. Check out Wealtheo’s personal finance courses today and find out how you can achieve the wealth and success you always wanted.