Entrepreneurs and new business owners maystruggle to move forward on their business plans out of fear of how they willfund their operations. Saving money however you can is critical to your startup’s survival. Whetheryou’re just starting to put together your cash flow projections and businessplan or you’re already in business, there are ways to cut costs on necessaryexpenditures to stretch your operational dollars a little further. Consider thefollowing five ideas to cut corners and save money in the long run:
1. Location Overhead
Your company’s physical location is aconsiderable part of your operating expenses. You may not be able to avoidhaving to lease a space and make rent payments, but there are three ways youcan save money on your lease overhead:
Lease a Smaller Location
If you haven’t committed to an office or retailspace yet, consider leasing the smallest space you can get away with. Doing socould cut your rental payments and utility bills, since you won’t have tolight, heat, or air-condition such a large space.
Use a Coworking Space
There are coworking locations nationwide that provide use of workspaces on an hourly or daily basis. Perhaps you can start your business by having your key staff work remotely from home until closer collaboration or meetings are required. You can then rent a coworking location as needed to conduct business with your team.
(Editor’s note: Coworking spaces often include comfortable ergonomic chairs which can protect you from neck and back pain.)
Share Your Location
Is there a business owner or company thatprovides non-competing or complementary services to yours? For example, if youhave a beauty and clothing boutique, can you rent your attic as a studio to alocal wedding photographer? Or if you have a men’s barbershop, perhaps you canshare your space with a tattoo artist.
Consider renting a portion of your businesslocation to another business or startup to share in the lease costs. It cansave you both money and also create a synergy where you can share customerswithout directly competing with each other. Make sure to check with yourlandlord before you do — many leases are written to prevent subletting or sharingof a commercial location.
2. Make Green Energy Choices
One of the easiest ways to reduce your startup’scosts is by addressing your company’s energy use. Place timers on your lightsources, so they turn off at a set time. Change all your lightbulbs to LEDbulbs. They may be more expensive than a regular lightbulb, but they’ll lastlonger and use less electricity, offsetting their cost in lower utility billsin the long run.
Look for government rebates on many energy-efficientproducts like light bulbs, appliances, and industrial equipment that uses high-energy processes.Making cleaner and greener energy choices is good for your company’s bottomline and something you can market to your target audience to show yourcommitment to the environment.
3. Vehicles and Equipment
If you need company vehicles (such as trucks oremployee cars) or larger equipment, buying them new will likely put a majordent in your cash flow. If you’re not sure how much you can afford, consider buyingpre-owned vehicles or lease the equipment and cars your company needs for theshort-term. Revisit your cash flow projections and income after a couple ofyears to evaluate if buying makes more financial sense, or if continuing tolease is the best decision.
4. Staffing
Hiring employees is a big financial commitment. You’ll beresponsible for their pay, taxes, insurance, and benefits. If you can’t affordto bring on full-time hires, but your business is suffering from a staffshortage, get creative with your hiring habits. Freelance or contract workerscould handle specific tasks for a short period of time. A virtual assistantbased remotely overseas can take over secretarial, administrative, and smallermarketing duties for less than a local employee.
5. Marketing
Many businesses make the mistake of not spending any money on marketing until they start making money. The two are interrelated — if your company is not actively marketing and reaching out to your target audience, your sales are likely to remain stagnant or decrease. Having a low marketing budget doesn’t mean you should scrap your marketing plans. You’ll need to get creative instead. In fact, some of the best marketing techniques are considered guerilla marketing tactics — they’re bold, they’re creative, they’re usually cheap or free, and they work. Some free or low-cost marketing ideas you can use to promote your business and grow your sales include:
- Focus on creating a website using a free template from your web host
- Market to locals through social media
- Make sure your signage and windows tell your company’s story and include your website and social media handles
- Ask your friends, neighbours, and family to tell their coworkers and friends about your business
- Organize events like art walks, restaurant strolls, or outdoor markets, with other community businesses to promote each other
- Attend business networking events
- Promote your business at your children’s school
- Learn how to write a press release and send one to local newspapers, magazines, and blogs
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