Money is a double-edged sword. It can be the key to your success or your downfall. In about 29 percent of businesses, cash-flow issues cause a shutdown. On the flip side, well-managed finances are key to success in business.
Although managing cash is vital, don’t let a relative lack of it hold you back. You can adopt the following eight ways to cut costs and save, right from day one.
- Use Existing Space for Your Office
The overhead costs of running a company can be overwhelming to a startup. Being able to minimize those can kickstart success.
Many startups do not require an official office space at first; many firms can easily be run out of the home. If you want a designated space, but don’t have room inside your house, what about cleaning out your garage and turning it into an adequate office space?
You’ll want to winter-proof the garage and add suitable office furnishings to create a functional working space.
- Limit Your Labor Costs
For most organizations, labor costs are the biggest expense. As your firm grows, you can’t avoid hiring employees, but at the start, you should save by minimizing workers.
Until you can afford more, it might only be you and any partner who’s willing to work without a paycheck until a promising business turns profitable.
- Understand Potential Tax Credits
Business taxes can gouge you if you don’t work with the system. Tax credits and deductions can help you avoid overpayment of taxes. Without them, you could have a difficult time remaining operational.
Save your receipts and use an accounting software such as QuickBooks to track spending. Consult with a certified accountant on tax credits and deductions you may take at tax time.
- Negotiate with Vendors
Many startup owners don’t realize that rates from vendors are negotiable. Sales people work hard to convince you you’re getting the best deal on products and services, but they rarely mention their bottom dollar up front.
Practice your negotiation skills before you meet with vendors. A few well-chosen words and compelling statements about loyalty and competition may win you a significantly lower rate nd significant savings over the long run.
- Utilize Free Trials and Services
The free version of a software program is typically adequate for startups that have few employees and customers. You might have your eye on an all-inclusive software package that will make certain aspects of the job easier, but when you’re low on cash, a different, free version should do.
Research the best free software and online services in every category. You might be surprised by the quality of these free services. You can always upgrade when your business grows.
- Shop Around
Never accept a price at face value. Shop around for the best price, even if it means calling ten different places for quotes.
Let each vendor know you’re shopping around because each will offer you better rates. This can be time consuming, but will potentially save you plenty in the long run.
Even after you’ve settled on a service, you’re not stuck with it for life. If a better one comes along at a better price, don’t hesitate to switch.
- Spend Smart Marketing Dollars
One area you absolutely have to spend money on is marketing, but that doesn’t mean you shouldn’t be frugal. Some marketing tricks are far more effective than others, depending on your type of business.
For example, most online firms see greater benefits from purchasing SEO content and marketing as opposed to PPC ads. The latter has its merits and should be explored when you have more cash, but if you’re starting out, your marketing dollars are better served by SEO.
- Prioritize Big Spending
Big purchases are another unavoidable aspect of running a successful business, so be careful about them. Stay smart and prioritize spending.
For example, new office chairs would undoubtedly be nice, but in a paper-heavy business, they’re not likely to be as essential as a functioning copier and scanner. When you buy big-ticket items, focus on what will initially bring the highest return.
Startups that prioritize spending and minimize overhead where they can tend to have the most success. Given the high failure rates among startups these days, it’s crucial for you to watch your budget and focus on efficient returns.