Joydeep Bhattacharya — April 8, 2020 Today, we’ll talk about the tips that are actually going to make a big difference to your savings when starting a new business and not just little bits of penny-pinching here and there.
We are going to identify where you spend the most, how you can save some of that money and be able to invest that to make that money grow into more money.
Thus, when it comes to saving money, these are 5 tips that I found work exceptionally well.
1- Minimize Business Expenses and Cut your Costs
Cut expenses and start saving money; to do that, first calculate your start-up costs by making a list of things you need for your business like rent, utilities, equipment, tools, raw materials for production, supplies, inventory, branding, identity, website, marketing, etc.
Once you have that list in hand, go and see if there are ways to reduce your cost. Try to trim back 25% or more. Check what things could you reduce or put off or buy differently, as we want those start-up costs to be as low as possible in order to have the best chance of success.
From day one, it is important that you learn how to preserve cash. Start with only the absolute essential and focus on your needs, not on your wants. Buy used equipment or lease equipment rather than paying for it outright. Another great way to save money and start-up is to get start-up money from your vendors by giving you payment terms, as that will help you with your cash flow. In addition, on the foot side of that equation, collecting deposits or pre-payments from clients will help reduce the amount that you need to start up.
2- Look for Discounts & Deals Everywhere
Do you want to save on some of your biggest expenses? Then, don’t shy away from asking for a discount wherever possible. When it comes to your business, ask your vendor for a discount. Many are willing to negotiate a lower price and often they agree as they do not want to lose their customers. Long term loyalty is worth something.
You can also use discounts and deals to cut personal expenses, which should help to free cash flow. Ask your landlord to negotiate your lease to save on costs. Is there something your business can offer your landlord in return for a break on rent? Make use of discounts, deals and promotions for any personal spending, eating out and entertainment. Utilize discounts when it comes to insurance and utilities. Many companies, especially car insurance companies offer a plethora of discounts for individuals, affinity groups, and more.
The bottom line? Whenever you can in business and personal life negotiate better terms, seek out deals, and make smart money decisions. Remember, failing to explore cost-saving alternatives means leaving money on the table.
3- Trade and Barter
Bartering is an exchange of goods and services without using money. It is an effective and efficient way of increasing your sales, saving cash, moving inventory and making use of excess production capacity for business.
Make a list of what you can offer and then, make a list of who you can barter with. However, make sure that the products or services that you are exchanging for should be of equal value.
Start-ups and expansion companies with limited money for growth can use bartering as a strategic tool to acquire needed services. There is no need to pay money every time, try to get dealers who are willing to trade in a barter system, exchange goods or services instead of the cash. Thus, bartering is a great way to save money.
4- Outsource your Business
Entrepreneurs are really focused on getting their business off the ground and saving money as much as possible because when you are just getting started there is not a lot of cash flow coming in.
In this modern age of specialization, you can find almost anyone to do almost anything in your business. Consider sites like Udemy and others to find quality contractors that can help.
Finding someone who all they do is live and breathe that particular skill set is going to get you an infinitely better product and is going to wind up costing you less overall. In addition, you are not going to spend 3 or 4 hours on something that you are not a good fit for and thus, you will pay someone else for 30-40 minutes of their time that will help you get a much better product at a cheaper rate.
Thus, outsourcing helps drastically reduce your labor cost, eliminates your overhead, and thus, results in either untouchably competitive prices or huge profit margins.
5- Hire Interns
It is a great idea to invest in some interns in your business. These interns are excited to step into the world and to gain some real experience after they spent hours or months or even years in the classroom becoming educated. Many of these interns will come to you with very specific expertise or knowledge based on their education and that is why you are hiring them to do some specific role maybe it is marketing or business development.
Moreover, it is a minimum investment for a business. In an internship, interns gain experience and exposure to their chosen industry. You can offer them placement in your company for an inexpensive cost. However, make sure that you are providing structured training with defined goals and measurable outcomes. This should be a mutually beneficial agreement for interns and employers.
Final Thoughts
At the end of the day, I believe it is up to us to take personal responsibility to learn better money management, meaning being aware of our spending and learning how to save. This applies to successful businesses more than anything.
Knowing your budget and learning your spending habits is key. Once you know what your true expenses are and where your money is going, only then can you take steps to do things differently. From there you can set new goals and create a well-planned and approach for forwarding growth.
Do whatever you can, work hard, save more, invest it in your business and as a result, see great success.
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