Starting a business can be costly, and if you squander all your funds too fast, you might not even make it past the first year. But it doesn’t have to be that way. With some smart financial planning to cut costs, you can start turning over a profit quickly. Colorado businessman, Victor Mitchell, describes some intelligent ways to reduce costs in your company:
- Outsource Business Tasks
When you start a business, you’ll quickly realize just how much work needs to be done. It isn’t just about coming up with a plan, finding customers, and selling to them. You need to consider legal aspects, human resources, maintenance, and a whole lot more.
Many startups cut costs by outsourcing specific business tasks. Instead of hiring a whole marketing department, pay an experienced digital marketing firm to get you guaranteed results. Instead of blowing your funds on bookkeepers and accountants, hire one accounting service to handle your finances.
You can do this with a lot of business tasks, and it’s an ideal way to save funds when you’re starting out.
- Downsize Your Premises
Many startups make the error of starting off too big. If you’re running a small business, start with a small space. Stores might need some extra room for stock, but things like B2B services and cafes can get by just fine with a humble commercial property.
Your location will be one of your most significant costs, so start off somewhere with low rent and low maintenance costs. You can always upsize as your profits grow.
- Start with A Small Team
Starting off small can apply to other parts of your business too. Of course, you need to invest money to start making money back. But going overboard can often result in a poor return on your investment.
When it comes to your team, start off with a small but ambitious workforce. Instead of hiring tens of employees in multiple departments, gather a small team of talented and experienced individuals. By investing more in the right people and less overall, you’ll save costs and increase profits.
- Get Extra Funding
When you need to invest more in your business, consider getting funding. You could reach out to investors, show them your potential for future profits, and get the money you need to take your business further. You could also offer investment opportunities to friends or family.
Crowdsourcing is another option. If you have a business idea that appeals to a lot of people, you may get all the money you need on a site like Kickstarter.
By finding ways to fund your business without having to pay it back, you can cut your expenses and take your business further.
- Save On Equipment
Equipment may not seem like a big deal at first, but it’s something that can add up quickly over time.
When you’re buying equipment like furniture and computers, look for the best deals available. Many companies specialize in offering bulk office equipment to businesses at lower costs.
Even the small things like printer paper, kitchen supplies, and even toilet paper can be costly over time. Buy these in bulk and look for the best price.
- Use DIY Marketing
There are many marketing services out there, and a lot specialize in different areas. Some startups fall into the trap of paying out for content, social media, growth hacking, and customer retention management without making the profit back. It’s also easy to squander your funds on ineffective advertising.
When it comes to marketing, you want to get the best return on your investment. Therefore, when your business is in its early stages, sometimes it’s best to do it yourself. Many effective marketing strategies are easy to carry out without any investment.
This can involve things like creating SEO-friendly content, launching social media channels, and building a mailing list for email marketing. Handling this yourself can give you control over your marketing and start driving up sales first-hand.
- Create A Budget
When it comes to financial management in any area of life, budgeting always helps. Keeping track of all your incoming and outgoing money will help you manage it effectively.
It helps to set a monthly budget to figure out the most practical ways to use your funds. This could be a portion of your funds or a percentage of your profits. For instance, you might want to plan to reinvest 10% of your earnings each month and a portion of your startup funds.
Plan out in advance how you’re going to use your money to improve your business and increase sales. In doing so, you’ll notice much more profits over time and have much more money to reinvest.
- Assess Your Expenses
Sometimes businesses lose far too much money merely by not tracking their expenses. You should take note of everything you’re spending money on in your business and assess your costs regularly.
For instance, you might realize you’re blowing too much of your budget on production costs. By identifying this, you can strategize ways to cut these costs and save more money each month.
The same applies to anything. You might be spending too much on equipment, marketing or even poorly performing staff members. Figuring out smart ways to cut down on expenses will help you increase your profits.
- Start at Home
Sometimes the most effective way to save money on your startup is to start at home. Many successful businesses started off as solo enterprises straight out of a house or garage.
You’ll be surprised how much you can do with a home business. Many people operate solely on their own and start selling products or services online. You can handle all kinds of operations single-handedly and, for those you can’t, you can always outsource.
The benefit of home businesses is you’ll barely have to invest anything. That means that you’ll be making impressive profits over time.
- Use Tax Deductions
Many small business owners might not realize how much money they can make back on tax deductions. When it comes to filing your taxes, you can get money back for costs like transport, equipment, your premises, and even your business phone bill.
Make sure you talk to an accountant about this and keep a record of all costs that could count as business expenses.
With some smart financial planning, you could cut back on your startup costs significantly. These strategies will also help teach you to manage your funds effectively. You’ll have more money to reinvest in the things that drive up sales. All of this put together will result in a more cost-efficient business and a more profitable enterprise over time.
About Victor Mitchell:
A serial entrepreneur, Victor Mitchell has successfully founded, acquired, and/or turned around numerous diverse business ventures over the past 30 years. His ventures include interests in finance, transportation, communications, technology, building supplies, real estate development and brokerage services.
Victor Mitchell is the founder and CEO of Lead Funding, a specialty lending organization that provides innovative private financing solutions for homebuilders and developers, reducing their red tape and speeding up loan decisions.
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