For a startup business, every dollar counts. Unforeseen business expenses are more common than any business would prefer. For startups looking to cover costs in every aspect – from rent to industry compliance – these unexpected costs can be overwhelming. As a result, it’s prudent to save as much money as possible whenever you can.
Here are 10 ways startups can save on business costs:
Invest in an Office Space When Ready
The words “when ready” are important here. If your business is just starting out, consider operating from home or a mobile office for as long as possible. When the time comes to move to a larger space, verify that you have enough funds to hire staff and fund marketing to maintain and groom whatever initial interest the business has garnered. With free collaborative tools like Google Drive, a startup can operate outside of an office even with current employees, who can all telecommute until a proper office space is finalized.
Implement “BYOD”, At Least Initially
Chances are, your employees have some sort of laptop or portable device they do work on at home. If your business is looking to keep costs low during its first year or so, inform potential hires and employees that a “bring-your-own-device” procedure is preferred. Many will actually prefer the comfort of using their own devices. More importantly, it can save thousands in equipment costs when your business needs that money for other costs with no cheap alternative.
Consider Freelancers and Outsourcing
While some tasks for a startup business require a full-time employee with dedication, there are other tasks – like customer support and PR outreach – where freelancers can be just as effective as and cheaper than hiring someone full-time. Use Craigslist or a site like Elance to find the right freelancer for your business.
Research Tax Deductions for New Businesses
First-year businesses in particular are eligible for tax deductions. If your startup costs were less than $50,000, you can deduct up to $5,000 from your own taxes. This doesn’t even include office expenses like marketing, advertising, utilities, office expenses, rent, and other startup costs. Hiring an accountant with startups in mind can be a solid, cash-saving solution.
Create a Business Budget
This may seem very difficult for a startup, especially since unexpected costs are imminent, but create a business budget to the best of your ability regardless. It doesn’t have to be rigid. In fact, a startup budget can be fairly flexible as long as you outline what additional expenses should be considered and which ones should not, in addition to valuing the methodology of “go inexpensive, but not cheap.” Some semblance of a budget can keep many startups in line.
Don’t Be Afraid to Negotiate
Regardless of whether you’re dealing with a software manufacturer or freelance PR expert, do not be afraid to negotiate their rates. A quality partner will recognize that you are a freelance business with budget limitations and that negotiation may strengthen an initial relationship that – one day – can result in very profitable circumstances for both parties. If they refuse to negotiate, there are likely plenty of alternatives.
Keep Office Furniture Basic and Cheap
It would be fun to have a trendy office, and that may happen one day, but for the first year or two a startup business should think cost-efficiency when considering office furniture. This means resorting to garage sales or Ikea for chairs, desks, and other office essentials. It doesn’t have to look amazing; just make sure it gets the job done.
Do Not Underestimate the Importance of a Quality Hiring Program
Interviewing potential employees and then training new hires is a costly and time-consuming process. As a result, it’s best for all parties if the hiring process gets it right the first time. If you’re looking for an area to invest in, consider improving your hiring program. Although it may be somewhat pricey to invest in proper interviewing and hiring training, it can save thousands of dollars and hundreds of hours in the long run.
Crowd Source for a Logo
Some graphic design companies charge thousands for a logo. You can save massive dollars by using a crowd sourced designer instead, on a site like Elance or 99designs. Simply let the artist know what you have in mind, negotiate a fee, and your business should receive a passable logo that you can use immediately.
Skip the Unnecessary Luxuries
Seeing other companies host picnics and lavish employee dinners may inspire some jealousy, but startups should recognize that these types of events are usually not worth the cost, even if they do bring employees together. If you’re looking for a team-building approach, consider more affordable options like “Board Game Fridays”, where employees can interact with each other in a fun way without costing the business a pretty penny. The luxurious events should only be considered once your business is established and financially secure.
If businesses use these ten tips to cut down on costs, they’ll notice significantly more wiggle room when an unexpected expense pops up. In some cases, this can be the difference between success and failure.