9 Essential Ways to Cut Your Startup Costs
Startups often have shoestring budgets which is why it’s important to know how to make every cent count and how to differentiate between your “needs” and “nice-to-haves”. Start making your budget work for you by cutting some of these nonessential costs.
Skip the office space You don’t need to rent out an office space right away. In fact, you can probably put it off for a number of years. While you’re getting your business off the ground, there’s nothing wrong with having your team work from home.
As you start growing, or if your business venture really requires more hands-on team interaction, look into coworking spaces. Companies like WeWork, Spark Labs, and The Port Workspaces have locations around the country, and many cities have their own options available, as well. Coworking spaces allow you to rent space, from a desk to a full office, for a day, a week, or a month to fit your needs. Some apartment buildings in cities like New York and Los Angeles have conference rooms tenants can reserve for free, which may be another option for you.
Avoid hiring people Don’t worry, this won’t be forever. But while you’re starting out, don’t burden yourself with paying additional salaries, insurance and legal fees. You can accomplish a lot using freelancers and independent contractors to handle some of the duties that you either don’t have the time or skills for. In the long run, it’ll save you thousands.
Allocate most of your budget to marketing Marketing is how you’re going to reach customers and turn sales. If you’re spending more money on the backend, it’ll be a little while before you see a return of that money. On the other hand, if you can cut costs in other areas, even temporarily, you can start making sales to generate income, which can then be put towards making improvements to the areas you cut back on.
Rent vs. Buy In most cases, it’ll be cheaper for you to rent the bigger, more expensive equipment than to buy it. For example, if you need to do a photoshoot for your product, it’ll be cheaper to rent the camera and lighting equipment than to purchase it, use it once every few months, and pack it away. When it comes to things like printers, sit down and work out the numbers. Do you need to print every day? Or can you get by with weekly trips to Office Depot and Staples to take care of paperwork? Commercial printers come at a hefty price and it wouldn’t make sense to invest in one if you won’t be printing daily.
Save your receipts Every cost related to your business is tax deductible, from your office space (at home or elsewhere) to your internet bill, so save all of your receipts. While this won’t save you money right away, it’ll give you a much needed break come tax season.
Take advantage of free Free doesn’t have to be forever, but while you’re just starting out, it might be best to give the free software versions and website templates a try, then upgrade when funds allow. This also means you get to test out your options and see which products you like and don’t like, before investing hundreds or thousands into it.
Keep track of subscriptions Nowadays, everyone is doing subscription models. You pay monthly for everything from your phone to Photoshop. While $10 a month doesn’t sound like a lot, when you start racking up those subscriptions fees, $10 grows to $100 or more. Make sure you know what is a need versus what is a nice-to-have. You probably can’t avoid paying for your website hosting, but paying for a monthly email automation system that has a perfectly good free version might be one of those things you want to save for upgrading later on.
Continually shop the market There are some expenses you probably can’t avoid. For your business, that might be paper or internet service. Make sure you’re constantly checking the rates of your supplier as well as competitor sources. For things like physical goods, it’s easy to either request a price match, or switch and buy a different brand. For utilities like your internet service, you probably don’t want to switch providers every month, but that doesn’t mean you can’t call and ask about current rates and specials, or let them know that the competitor’s price is lower and you’d like to be offered a similar deal. Any time you’re going to spend money on your business, double check the prices, even if you’ve been buying the item for years.
Utilize your connections See if a lawyer friend is willing to contribute legal advice or offer to exchange services with a fellow entrepreneur. The worst that can happen is you hear a no, and then you’re no further ahead or behind than you were in the first place. It never hurts to ask.
What ways do you cut costs in your business? Share your advice in the comments below.