When starting a business, every Rand counts. At the beginning stages of starting a small business, you’ll need to consider costs for equipment, office rental space, computer software, hardware and more. Your suppliers and employees, if you are an employer, need to be paid. You might be looking for some ways to save on the initial spending when setting up your business, so in this article, we explore a few tips on reducing expense costs.
1. Used equipment.
When starting a business, resources such as your cash flow might be scarce. However, everything you need to get the ball rolling need not cost an arm and a leg. There are ways to obtain the necessary equipment for business operations at reduced costs.
When considering your business’s equipment needs, it’s wise to explore the second hand or use equipment options. Many small businesses shut down for a number of reasons, and often it presents opportunities for others to capitalise on these companies who are seeking to make some money back by selling their equipment.
Another option for buying cost-effective equipment are auctions. Whether they’re government or private auctions, you’ll often find amazing deals on gear for your business operations.
2. Virtual office.
Technology has allowed for businesses to be unrestricted to one location, depending on the nature of the company. Depending on the nature of your business, you could opt to start your operations from your home using a myriad of virtual tools to connect to your employees, target market and customers.
Once your business is established, and you have a solid customer base, and you’re able to spare the cash, you could move operations to an office or commercial space.
3. Bartering, and exchange of trade value.
Bartering between business owners and clients is an effective method for multiple parties to obtain things which they might need. Of course, this method might be one you can use upfront, unless you perhaps have assets to barter from previous or other ventures. Once your business is established, there’s the possibility of swapping services or unused equipment with similar local businesses as an exchange of trade value.
4. Open Source Software.
The cost of paid-for software for your business can hold a pretty penny when starting out. However, many software packages used today by companies are open-source. The term open-source refers to the non-proprietary nature of this form of software, i.e. it’s usually free or notably less expensive than commercial software.
POS (point of sale), accounting, and bookkeeping software are just a few examples of software with open source options. Remember that when using open source software, there might be limited or no official support at all, however, help can be easily found via community forums.
If you’re seeking to save on the initial purchases in the initial outlay phase of your business, open-source software is a cost-effective solution to help get your business on the go.
5. Suppliers.
Perhaps your business is going to be generating products to be sold. You’re going to need to find suppliers for your raw materials. Take the time to shop around for different suppliers, compare their products to your business needs and ensure that the pricing points align with your budgets. It’s never wise to opt for the first supplier that comes knocking, however, even if they are the cheapest. Ensure that you do your research and homework on each potential supplier before making a decision. It’s prevalent for suppliers to be willing to work and negotiate rates with their customers, so always be on the lookout for those who are eager to offer discounts and special rates.
Lastly, don’t limit yourself to local suppliers, of course, using local suppliers is excellent for the local economy. However, you might be missing out on some fantastic suppliers internationally who might even offer discounts on shipping fees and bulk orders.
6. Discretionary expenses.
Discretionary expenses refer to the costs which you might not have to pay at a specific point in time, i.e. at a particular deadline. You may not even need the expenses at all. Work through your expenses list and determine the expenses you can reduce or be rid of.
7. Outsourcing.
Perhaps you’re unable to find the talent you need for your business locally. Should this be the scenario, you always have the option of outsourcing your talent. It can be vastly cheaper than hiring an employee, and many established firms will have talent readily available, which you can rely on before starting the costly process of hiring internal recruits.
8. Incremental increases.
It’s wise to start your business efforts small and slowly establish increasing goals to grow your customer base. Once your business is a bit more established and operating well, you might find that you have some legroom to start spending a bit more. At these points of your business journey, you could opt to spend on equipment upgrades or perhaps even hiring new talent, if needed. Furthermore, you could also consider implementing changes to your business, such as new products or services or even expanding.
Incremental increase affords business owners the opportunities to accurately measure the effectiveness of each step in change before investing more capital into later stages. By utilising smaller incremental steps, you’ll effectively limit any potential losses, should a planned shift or change not go as planned.
9. Tracking your cash flow.
By accurately tracking your cash flow, you’ll be saving your business from potential late fees or missed repayments. As the owner of your business, you’ll no doubt always hear about how vital cash flow is to your business. It’s no secret that many companies don’t last due to running out of cash as a result of not accurately tracking their cash flow expenditure.
It’s of vital importance to track your cash flow from the get-go of running your business. Cash pays for your expenses before you reach the stage where you start generating revenue and also covers any potential costs which might pop up along the way.
Conclusion.
Starting a business does not need to be a costly endeavour. If you’re starting on a limited budget, we advise considering the tips mentioned above to save cash as you navigate the beginning stages of establishing your business.
Business.co.za
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