With the enticing vision of achieving considerable wealth, more and more people decide to try their hand at starting a business. They often start with not much – as First Site Guide reports, 58% of startups have a budget of less than $25,000, which puts such ventures in a bit of a difficult spot where they have to prioritize what is really necessary at the moment, in order to be able to run a startup on a budget.
If you look at online sources, you will find many articles that say you cannot cut corners. And while it is true, especially regarding the quality of your products or customer service, sometimes there is no other choice than to save money on other aspects.
But where should you cut those corners, so it does not negatively affect your startup? That is why we will try to answer. From location to budgeting to technology – here is how you can save some of your business money. Take a look at these 3 tips on running a startup on a budget.
1. Startup on a Budget Tip #1: Budget Management
A company’s budget is, without a doubt, an important aspect of running your business. It is what will keep you funded and able to pay for everything you need. With all those numbers, many entrepreneurs believe that they are not up to the task, and they decide to outsource it. Of course, this costs more money.
However, you might not necessarily need someone to manage your budget, especially if you are just starting. As a business owner, you should understand what the numbers really mean for you so that you can make the best decisions for your business. This means dealing with those numbers as much as possible instead of delegating them to someone else.
It is a common practice with people like Tommy Mello, the owner of A1 Garage, also being responsible for the budget in the early stages of his entrepreneurship.
The good thing is that there are many types of financial software available that can help you manage your money, ultimately helping you make better business decisions when running a startup on a budget. Many of them have useful features such as invoicing, payments and receipts, expenses, taxes, payroll, reporting, and so on. Some of them you may even have experience with. For instance, the very same software you use to file your personal tax forms for free can also be used to report—and pay taxes on—your business revenue depending on the structure.
2. Startup on a Budget Tip #2: Location
To launch your business, one of the first things you will need to do is find a place to set up your business. However, with real estate prices soaring, it might be a major account-draining expense. While you might want to have a spacious sunlit place, depending on your business, it is not always necessary if you are just starting out.
There are many business ideas that you can start from your own garage. But if you absolutely need a place outside of your property, try to get a smaller one or look for a cheaper location. The prime real estate will be too expensive for a startup on a budget, so try to find a place that is a bit further from the city center.
Another option would be renting coworking spaces since it will cost you less than having your own office. Nowadays, there are plenty of coworking spaces you can rent by the day, week, or month, and they usually come with all the amenities you need, such as Wi-Fi, coffee, printers, and so on.
Or you could look into renting a virtual office space, which is much cheaper than leasing a physical office. Although it does not have all the benefits of a shared office, it is still a viable option for your startup if you are not quite ready to make a financial commitment.
3. Startup on a Budget Tip #3: Technology
With the rise of smartphones, tablets, and other devices, technology can help you run your business much better than ever before. However, it is important to keep in mind that technology costs money, and sometimes this can be a huge expenditure for a startup.
We are not encouraging you to stint on technology since it might cost you more in the long run, but we do recommend that you remain mindful when choosing your tools.
With the wide variety of tools that can help you streamline almost every business operation, you might feel tempted to splurge on most of them. However, your budget will quickly run out. Hence, you need to determine what is that you really need and what is just a want.
For example, buying the latest model of Macbook for everybody in your office will be major overspending. Instead, you should go for cheaper but more reliable equipment. Moreover, you could look into second-hand office electronics.
For software programs, you should consider which tools are necessary for your business strategy since there is no need to pay for something that you will not use to its full potential. Moreover, there are many great software programs out there that are free to use or have a free version with limited features. When starting a business, you should take advantage of these, so you do not have to spend money on expensive licenses.
It is no surprise that running a business costs a lot of money, but there are always ways to cut corners without compromising your business. But as we mentioned earlier, being stingy in some areas might save you money, but in the long term, it might cost you more.
That is why, the idea is not to scrimp on what you need but to be smart about it. You just need to prioritize and decide what is really necessary for your business at this particular moment and how much money you are willing to spend. Try to look for cheaper alternatives if you can and make sure you are making the most out of your budget by not spending too much on unnecessary things. You will be surprised that you can actually run a startup on a budget and amazed at how much you can save.
If you’d like to learn more about startups, check out these links: