A company is never as vulnerable as it is when it’s first starting out, so keeping an eye on costs and overheads is essential. Many businesses start out on track, but this is due to the fact that they are at the beginning of their invoicing cycle – budgets and forecasts can quickly be thrown into disarray if you take your eye off the ball, customers don’t pay on time or something unexpected arises. The lower, you keep your overheads, the better chance of your business riding the storm and reaching the clear waters beyond. Here’s how you can minimise startup costs and give your company a fighting chance.
Finances can easily spiral out of control if you haven’t a defined budget to guide you and keep you out of trouble. Examine each area of your business and decide what you have available to spend, and then stick to that figure. You can always readjust your budget and upgrade any area when your business begins to show a profit.
The next question to arise will be where to locate your business. To save money many people initially work from home, however this isn’t always ideal, especially if you want to give an aura of professionalism and impress prospective clients. Taking your time in selecting an affordable office is important. It may be cheaper for example to consider a ‘serviced office’ where certain costs are built-in to your contract. Another option to look at would be a ‘virtual office’ – an even cheaper option and the preferred choice of many start-up companies.
A virtual office provides you with a physical address but you don’t actually need to work at that location, so you have the mailing address and the prestige of an office, but none of the associated overheads. In addition, you can use it as a casual workspace if you need to get out of the house for a while, or for meetings and client visits.
If you need to raise funds for your business, particularly through traditional means such as banks, you will probably find that you have to pay very high interest rates. This can prove prohibitive to many fledgling businesses. Fortunately, during recent years, others sources of business funding have evolved which don’t have such high costs attached. These include: ‘Angel’ investors, micro-loans, community organisations and crowdfunding schemes – a good business advisor could save you a fortune and many of them provide free mentoring and very useful advice.
Equipment can be an expensive drain on your business, so always think carefully about exactly what you need. Don’t go down the route of acquiring poor-quality equipment, as this will usually cause more problems than it solves. However, you don’t need to purchase everything brand new either.
Rent or lease whatever equipment you are able to, as this will give you the ability to upgrade or to change the specifications of the equipment as your business evolves. You should also consider purchasing second-hand equipment, as there are substantial savings to be made at online marketplaces, local auctions or even on liquidated stock if a business has gone bust.
Whilst experienced, talented employees are always going to be a boon to your business, in the early days particularly they can be a big commitment. This isn’t only in terms of salaries, but also benefits, payroll overheads and the awareness you need to have of employment legislation.
When you are just starting out it is probably best to take advantage of the talented freelance community that has evolved over recent years. You can either source freelancers through sites such as Freelancer.co.uk or Elance.com, or ask around your peers for personal recommendations. Freelancers can be used for a wide variety of tasks, including administration, web development, graphic design and even legal advice. The advantage is that you aren’t employing anyone directly, so aren’t liable for National Insurance contributions, and can work with them just for the time you need them, with no long term commitment.
Although traditional print marketing still exists, in recent years it has largely been overtaken by online methods. For any new business start-up, it is vital to have a high quality website that is going to get you found in search engines. A website is also a calling card for your business and so it needs to clearly summarise the benefits working with you can bring. Because of the need for a professional look, this is one area that it is a good idea to outsource to a web development company or an experienced freelancer.
Additionally you can market your business through the various social media channels and these, for the most part, are free. Establish a presence on LinkedIn, Facebook and Twitter where you can tell prospective clients about the services or products you offer and upcoming events and promotions. Once again, your business advisor or mentor will most likely have some proven contacts, so ask his/her advice.