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Keeping Your New Business Costs Under Control

Contributory

by | Jun 7, 2018

Some people have a great idea for a business – and the enthusiasm to bring it to life – yet it exists only in their mind. Why is this? It could be because, much as they would like to set up their own company, the attached costs mean it’s just not something they can think about realistically. However, the issue is rarely how much money you have; it’s what you do with the money that’s important. It’s more than possible to get your business underway even with a small amount of money, providing you’re keeping your costs under control. We take a look at how you can do this below.

Have a Realistic Understanding of the Costs

Everyone thinking about starting up a company needs to complete their business plan. Amongst other things, this will provide a breakdown of costs – you’ll have everything that you’ll need to spend in the initial stages listed right there, which means you’ll face no nasty surprises later on down the line. Once you’ve got the numbers all figured out, you’ll have to work hard to make sure that you’re keeping to the budget. If you take the advice we offer below, then you’ll have the ability to make significant savings; so, if anything, you might just be able to come in at under budget.

Find Out What Others Do

If this is your first time setting up a business, then it’s unlikely that you’re going to have all of your costs figured out perfectly. Nobody gets everything right the first time around! Business, after all, is a learning game. However, you can keep your costs sensible by piggybacking on the knowledge of other, more experienced businesses. You won’t be able to find out exactly how many pennies other companies spend, but you should be able to discover where they’re spending their money. For example, if a similar business spends, say, 15% on marketing, and you’re spending 35%, then you’ll know that your marketing budget is overblown.

Staggered Payments

There’s going to be a lot of things that you need to buy when you’re getting a new venture underway, but that doesn’t mean that you’ll need to buy everything all in one go. For many things, you’ll be able to pay in installments. Instead of parting with one lump sum, you’ll divide the payments over the course of, say, a year. You may have to pay slightly more for this option, but if it frees up money in the early days of your business, then it might be worth pursuing. It’s worth remembering, however, that this might not be the best course of action in the long term. Once you’re established, it’s usually worth making one payment and getting it over and done with.

Think Long-Term

Having said that, there will be incidences, even in the early days, when it’s worth paying for things all in one go. This is especially true when it comes to your workplace supplies. You can usually make significant savings by buying your supplies in bulk. If you know you’re going to be using them all, then it’s worthwhile buying them all at once if you have the space to store them, that is.

Working from Home

Of all the biggest wastes of money new entrepreneurs make, it’s renting office space before they need it. Even a co-working space might be overdoing it, though there are advantages to working in these types of places. No, to begin, start in your home. If you have a spare room, then all you’ll need is a desk, computer, and a printer, and you’ll be able to do the bulk of your work. Though be aware that there can be drawbacks to working in your home; for example, it can be difficult to switch on and be productive, and then even more difficult to switch off at the end of the day. Take steps to get your “work head” on and then to relax, though, and you should avoid this problem.

The Office Essentials

Even when you’re working from home, it’s easy to fall into the old trap of getting ahead of yourself and kitting your office out unnecessarily well. And to be specific, this usually means the computer that you’ll be working from. Sure, no-one wants to work on a slow piece of junk, but equally, most people have no need for the high-end options offered by Apple and so on. So be sensible with your computer, and even consider going second-hand. You can always scale up when you can afford it, but you’ll feel a little silly if you outlay a lot of cash for a computer that you don’t need.

Avoid Hiring Full-Time Staff

You’re unlikely to be able to do everything by yourself, but you might have to get by in the very early days, when you’re still trying to figure out if you have a business. But when you do need to step up, it’s worthwhile keeping full-time staff off the agenda, at least initially. It can be costly to bring a permanent member of staff on board, and you’ll need to have a strong grasp of the company culture you’re trying to create, your specific needs, and so on, in order to get the person that’s right for you. Instead, look at working with outsourcing companies. The terms will be more flexible and cost-efficient.

Review Your Vendors and Suppliers

There’ll come a time when loyalty to the companies who helped you reach the top will be the right path to take, but in the early days, there’s little advantage of staying loyal to one company, especially if you don’t yet have a history with them. The truth is, they have more power than you do, and they’re probably not giving a deal to help you get off the ground. As such, consider shopping around with different vendors and suppliers, and choose the one that gives you the best value for money (note, this shouldn’t be taken as “the cheapest price”; it’s important to think about quality, too).

Keep Track

You’re going to be spending plenty of money in the first few months of your business. And if you’re not keeping a close tab on where it’s being spent, you might find that your bank balance is much less healthy than it used to be, and you’re not entirely sure when the money has been spent. As such, it’s best to use purchase orders to keep track of your records; if you’re afraid of the paperwork that they involve, set up an automating purchase order system. You’ll have all of your purchasing information right there, so you can keep close control of your spending.

Get Smart About Advertising

In the early days, it’s tempting to go a bit wild when it comes to your advertising. After all, you’re keen for people to see what you have to offer, and the only way you can do that is by paying for advertising. However, that’ll quickly eat into your budget – advertising isn’t cheap – so you need to think carefully about the type of advertising you’re spending your money on. Depending on who you’re trying to market to, you might be best served by social media marketing, print, or other online methods. Look into what type will be the most effective for your business, and go with that.

Know Your Target Audience

And taking this idea even further, make sure you know exactly what you’re trying to market your business to. Of all the expenses a blossoming company has, there might be none more important than market research. Your business can’t succeed without it. It’ll tell you the type of people you will be trying to draw into your company, which in turn will have a big influence on various aspects of your business. It’ll also prevent you from spending money that won’t be effective (i.e., advertising in an area heavily populated by people who fall outside of your target demographic).

Where To Invest

When it comes to keep spending under control, there’s a temptation to confuse that with limiting the amount of money you’re going to spend. They’re not the same thing! If you’re going to take your business to the highest level, then you’ll need to spend money – it’s just important that you figure out the right places to invest in your business. As the old adage goes, you need to spend money to make money; but make sure you’re reading up on the best places to invest before getting out the company credit card.

Review Every Penny

Ultimately, there’s only one failsafe way to make sure that you’re keeping your business costs under control, and that is to keep an eye on where you’re spending every penny. While this might seem like a big task, it’s not really; it’s just a matter of reviewing your expenses each week and measuring them against the amount of money you were expecting to spend. Do this, and there’ll be no nasty surprises!

xoxo, Karmen K

***This page may contain links from paying affiliates. That means if you buy using the links you’re helping me continue to provide free content for this blog. I only recommend products & services I use and love. BT-dubs this is my affiliate disclaimer, cool?

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