One of the most difficult aspects of creating a startup business is estimating and managing costs. Advertising, rent, salaries, and wages are just a few of the numerous expenses a new business may incur.
The following tips will help emerging entrepreneurs budget startup costs.
1. Create a Business Plan
The process of creating a business plan before launching a startup will generally force the business owner to map out potential costs in advance. By thoroughly outlining costs, businesses are better able to estimate how much capital they will need to allocate to potential expenses.
Engaging in a thorough planning process will also help business owners better predict the rate at which they may need to limit spending, raise capital, and ramp up in the future.
While a business plan does not necessarily have to be elaborate or even highly detailed in the beginning, the startup owner should ultimately have an idea of how much capital he or she has to work with and how far that capital will need to stretch within a given amount of time.
2. Go Digital
Businesses spend a surprisingly significant portion of their budget on paper and printing costs. Nowadays, the option to send and receive digital correspondence is more widely available and can translate to tremendous savings.
Many customers and clients prefer to receive digital receipts and invoices as opposed to paper records. Internal documents can be scanned, stored, and transmitted digitally instead of being copied multiple times and distributed.
By going digital, a small business can greatly reduce the need to own several copiers and printers as well as the ink, paper, and maintenance costs that are required to keep these machines running smoothly.
3. Share Workspace
Businesses that require office space may reduce costs by signing up for a virtual office plan. Virtual office space doesn’t include cubicles desks, or conference room chairs; instead, a virtual office is one that exists primarily in cyberspace.
There are several companies that offer access to virtual office space for a monthly fee that is generally much lower than the cost of renting or purchasing space in which to set up a designated office. Virtual office packages typically include one or more desks in a work area that can be used daily or as needed, depending on the terms of the contract.
The contract also typically includes access to a reserved conference room and a shared concierge as well as the ability to use the building’s physical address for receiving mail and packages. Companies that provide virtual office services typically have several different packages that offer varying levels of access, depending on the business’s needs.
4. Save on Furniture Costs
In some instances, a startup may already have access to commercial or office space, or paying to procure a more permanent space may be completely unavoidable. Businesses that have an onsite showroom or shop will generally need to lease or purchase space.
Nevertheless, there great savings to be had when furnishing the area. Cheap office furniture may often be rented or even purchased from companies that specialize in supplying corporate furniture. In addition, businesses that are anticipating closing will often sell cheap office furniture at a steep discount.
5. Invest Wisely
The key to budgeting effectively for a startup is knowing where to spend capital and also knowing where it is safe to be thrifty. For example, paying for a professionally-designed logo and website will generally be a top priority.
However, equipment like printers and fax machines may be purchased used at a fraction of the cost of buying them brand new. Used office equipment that functions properly and is in mint condition will have virtually no negative impact on the business.
In the end, it is to every startup’s advantage to have a business plan that maps out available capital and projected costs. Once the entrepreneur is able to anticipate costs, he or she can then more accurately explore the various ways of cutting costs and budgeting for the new business.
While saving money should be a high priority for most startups, individuals who wish to launch a successful business should avoid cutting costs in critical areas that may detract from productivity or overall professional image as first impressions are lasting, even for budding startup companies.