Thanks to technology, it’s never been easier to start a business. However, while there are many tools and platforms, you still need startup capital to get your enterprise off the ground. But, you might not need as much money as you think. If you get creative with your planning and execution, there are quite a few ways to save cash without sacrificing your business operations in the process.
So, with that in mind, let’s dive into eight ways to save money when starting a business.
Create a Budget
First and foremost, you need to know how much capital you have available to start your company. Whether it’s $5,000 or $50,000, knowing this figure can help you create a budget. Also, this step can help you get into the mindset of paying attention to your cash flow and profit and loss statements. All too often, entrepreneurs focus too much on the products and sales and don’t realize they’re not making money until it’s too late.
When creating a startup budget, you should begin with the essentials. For example, if you’re selling physical products, you’ll need inventory and a website. Also, while it would be nice to have a storefront and a storage warehouse, you’ll likely need to think smaller, at least at first. Start by selling products out of your garage or spare room, then build your business infrastructure once you can make sales.
Budgeting should also include your monthly and operational expenses. For example, what are your projected utility costs? What happens if you need to repair some equipment? Listing your operating costs can help you determine your minimum cash flow. This amount is what you have to make from sales to cover your bills.
Start Small With Product Development
Another common issue with startups is that they often bite off more than they can chew. Many business owners have visions of mass success, so they want to start big. However, you need to be much more realistic. When selling products, you don’t necessarily have to have a storefront or massive inventories. Here are some suggestions on how to start small with various business models:
- Physical Products – If you make them yourself, you can list them online on sites like Etsy and see what kind of demand you get. Once you build an audience, you can switch to your own website and increase your inventory level.
- Food Products – Instead of opening a restaurant or renting a commercial kitchen, you can start by setting up a vendor stall at local events. You can rent cooking equipment and buy raw ingredients, and prep everything onsite or beforehand in your own kitchen. This option works well because it can help you refine your business model before investing in a dedicated restaurant space.
- Services – As a service-based business, you’ll likely do most of the work. Start by performing jobs yourself, then hire employees once demand exceeds what you can do.
Utilize Free Business Tools
Thankfully, there are many tools and platforms out there to help you get your business off the ground. Some examples include:
- Business Formation – Are you creating a sole proprietorship, partnership, LLC, or corporation? You can utilize online services to register your business with your state and county quickly and easily. You can also get an employer ID number (EIN) to open a business bank account or hire employees.
- Payroll and Accounting – We’ll get into this later, but many online platforms help you keep track of your expenses and labor costs.
- Organizational Tools – As you build your operations, you have to stay organized and on top of everything. These tools can help you manage your time more effectively and ensure that nothing falls through the cracks.
In many cases, you can either use a limited free version or access a free trial for high-quality tools. Then, once your business gets up and running, you can upgrade to the paid version to scale up your operations.
Create Your Own Branding Materials
Branding is an essential part of starting a new business. Developing the right brand can help your company stand out from the competition and build a reputation to foster customer loyalty. Fortunately, you don’t have to spend a lot of money to create these materials, including:
- Brand Identity – What identity do you want customers to associate with your business? Are you a fun and friendly brand or an authority within your industry? Each component should reflect and reinforce this identity.
- Brand Logo – This graphic is the first thing most people will see, and it’s the element most associated with your brand. You can use budget friendly apps for designing logos that will help you create a professional logo at a low cost. From there, you can incorporate it into your marketing materials, which we’ll discuss later.
- Brand Colors – The colors you choose can impact how customers feel about your brand. So, if you choose the wrong colors, there can be a disconnect between what you offer and what image you’re presenting. Overall, consider the connotations of different colors and pick the ones that reflect your brand identity the most.
Manage Your Accounting and Bookkeeping
Once you’ve created an operational budget, it’s much easier to keep track of your expenses and income. Although you should still use an accounting firm to help with taxes and compliance, you can likely handle the day-to-day bookkeeping yourself.
Here is where you should invest some money in a program like Quickbooks. Otherwise, building your own spreadsheets can be time-consuming, and there’s a greater chance of error. Since accounting is the backbone of any successful business, you can’t afford to make any big mistakes.
Overall, you want to create a stable foundation upon which to build your enterprise. If your accounting practices are a mess from the beginning, it’s much harder to correct them after the fact.
Utilize Free Marketing Tools
Once you develop your branding materials, you need to start promoting your business. Fortunately, you can utilize various free tools to get your name out there. Some examples include:
- Search Engine Optimization – While you can pay for targeted ads, optimizing your website and landing pages costs nothing. Do some research to find out which keywords will generate the most traffic, then optimize everything accordingly.
- Social Media – You can create profiles on all social media accounts for free. While it can take time to build an audience organically, you can at least generate some buzz by posting regularly.
- Email Marketing – Some platforms like MailChimp allow you to manage a set number of contacts (i.e., 100) for free. Then, as you build your subscriber lists, you can pay for upgraded versions of the software.
Create Your Own Content
Content marketing is an excellent way to generate leads and build traffic to your website. Instead of paying graphic designers or videographers to create this content for you, you can do everything yourself.
Ideally, you can create some content before you launch. For example, you can write a few blog posts or edit some video clips. This way, you have something to show customers right away, and these pieces can help generate buzz for your brand. Then, as you get busier, you can start outsourcing content creation.
Work With Freelancers
Working with freelancers is a great way to reduce costs, and there are a lot of great freelancers sites out there. Fortunately, it’s easy to find those that fit within your budget. That said, you should do your due diligence and compare different freelancers until you find one you like. Also, focus on building relationships, not strict transactions. For example, if you use a freelance designer to polish your logo, you can then use them to create marketing ads or print materials. Overall, it’s better to work with someone you have a relationship with than to start over with someone else every time you need to outsource something.
As you can see, it’s possible to start a business with relatively little capital. As long as you focus on creating high-quality products and delivering excellent customer service, you can get your company off the ground. Also, don’t overextend yourself. Instead, start small and build your brand incrementally. Growing this way ensures you have a stable foundation for the future.
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