If you are planning to start a small business in the near future, it becomes very important to start saving for the purpose as soon as possible. Capital is the lifeblood of any business and if you run out of cash, it will be hard to keep the lights on for long.
Entrepreneurs can take various measures to cut costs and run their small business in an effective and profitable manner. If you are resourceful, it will be possible to trim your tax, utility, insurance, salary, marketing, shipping, and other overhead expenses.
Most entrepreneurs are aware that they are spending a lot, but still hesitate to take action to curb unnecessary expenditure. Do not procrastinate anymore and act right away. Here are a few helpful tips for you.
1. Lease or Buy Used Office Equipment
Investing in new equipment can prove to be expensive for a new small business. Also, these expenses will eat into your cash reserves and will end up locking away valuable cash. During times of a cash crunch, you will be forced to explore means of raising cash from equipment by leasing or refinancing them.
When you are in the early stage of your business, it is always wise to invest in gently used equipment, office furniture and other computer accessories. You will be able to save as much as 60% on costs by buying used equipment. Sites like equipmenttrader.com, IronPlanet.com and machinerytrader.com sell used heavy equipment. Refurbished computers, laptops and hardware are sold on sites like newegg.com, pcretro.com and dellrefurbished.com.
Equilease.com, elfaonline.com and leasefoundation.org are other sites where you can lease equipment.
2. Do Not Overspend on Office Space
Renting office space can prove to be too costly for a new business. If you can save on rent and carry out the initial operations from your home or from a co-working space, then that will be a very money-smart move.
Other office options include executive suites, incubators and accelerators.
Executive suites are fully equipped with all facilities that a business can ask for. Conference rooms, break areas and a common lobby along with an information desk and a receptionist are available for all the businesses sharing the executive suite. Some suites offer administrative services like data entry, mail management and other daily jobs. Because you are sharing the costs with other similar businesses, you will be able to afford a lot more within your budget, and the arrangement is scalable as well.
Incubators and accelerators not only mentor young businesses, but they are also provided office space to function in. Do consider participating in these programs to save on capital expenses.
3. Prioritize Non-Monetary Incentives
Startups and fledgling businesses can afford to offer deferred payment or equity options to talented employees. In fact, several employees consider them to be a rewarding aspect of working in startups. But, do ensure you speak to an attorney before going down this path.
You can also stay away from hiring full-time employees and work with freelancers or hire independent contractors. This way you can avoid paying employee benefits or incurring other expenses. Also, do not overlook fresh talent. College interns and fresh graduates often bring amazing abilities to the table. Startup and networking events, trade shows and job fairs are some of the places where you can hope to find young and promising talent. Staying active on social media will also help you know about who is buzzing in your circuit.
4. Ensure You Get Paid on Time
Cash is the essence of your business. If you do not get paid on time, your cash reserves will dry up. Ensure that you process accurate and timely invoices, and do follow up on the payment until you get paid.
It is important that you know billing cycle of various clients and manage invoices smartly. You can also make use of invoicing software that will automate billing and payments. With invoicing software, invoices will be raised in a timely and accurate manner, reminders can be automated, multi-currency and multi-client management is possible, online payment acceptance can be activated, and you can also generate profit and loss reports. Harvest, Wave, Zoho and Due are some of the popular free invoicing software suitable for small businesses.
In addition to getting paid, the invoicing software also gives you the option to go paperless. This is a win-win situation where you not only do your bit for the environment, but also save money.
5. Manage Your Money
Since business runs on the wheels of cash, it is very important you learn the ropes of astute financial management. You need not be an accounting wizard, but you should be a student in the study of the art of money management.
Stay on top of all financial transactions and have tight control over expenses. You can learn the necessary skills by saving well in advance to fund your business. Cutting down unnecessary expenses and living a frugal life will help you pick up the basic skills of making do with less. Always scout for freebies, discounts, coupons and bargains before committing yourself to buying anything. As you learn to differentiate between needs and wants, you will also learn to do the same while running your own business.
When you set up a new business, you have to manage several jobs. When you are a small venture, there are several avenues for you to save money. If you recognize cash-saving opportunities, the chances for your business succeeding increase drastically.