Launching a startup business can be one of the most exciting, yet daunting, challenges you’re ever likely to take on. The future success or failure of your new venture can often depend on how effectively you manage your capital during the early stages of growth.
In this guide, we’ll take a look at 7 ways you can save costs whilst your startup remains in its infancy, helping to ensure that your stress levels are kept to a minimum whilst your balance sheet continues to thrive!
It’s rare for any startup to realise its true potential during those fledgling years without some form of financing and, with so many options available to business owners, it can be pretty daunting trying to narrow down a cost effective solution.
It’s always surprising how many people will instantly turn to their bank or building society for funding, particularly in an age where online aggregators and innovating new lending products are popping up all the time.
Peer to peer lending has become a great resource for startup businesses, bringing together those who wish to invest their personal money into new businesses with those that need it most. You’ll often find that by turning to these online peer to peer platforms the rates available can be far more competitive with your chances of acceptance greatly increased.
Work In A Virtual Environment
The spiralling costs of commercial premises around the UK has made it harder and harder for startup businesses to comfortably afford a base from which to operate.
Thanks to the rise of cloud computing, faster internet connection speeds and video conferencing, it’s now entirely possible to run many businesses remotely from your home. In fact, anywhere with an internet connection can provide many sectors with a virtual office space, whether it be a local coffee shop of the quieter confines of a library.
Freelancers and Outsourcing
There are many roles and responsibilities within a startup business that may take just a few hours per week to complete.
Similarly, there may be a short-term project with which you need the help of a specialist, such as the installation of an IT network, creating a website, or kickstarting your social media. There’s little point in taking on a permanent member of staff when there are thousands of skilled freelancers available who specialise in a plethora of disciplines.
You’ll be able to negotiate a fixed fee or hourly rate in accordance with what needs doing and won’t have the pressure of employing somebody who’ll need employee benefits such as compulsory pension contributions, holiday pay or sick pay.
Bring Your Own Device
If you do need an office space to cater for the staff that you employ, then a bring your own device (BYOD) policy can be a game changer for your finances. Rather than having to invest in significant quantities of IT infrastructure, staff are encouraged to use their own devices (laptops and tablets for example). A BYOD policy can be used within just about every office based environment you can imagine including, but not limited to:
As well as saving you money, staff often prefer to use their own computer hardware as they’ll already have a thorough understanding of the system as well as a familiar, personalised digital space in which to work.
One word of caution – if you or any of your staff are working with sensitive customer data, it’s essential that you consider prioritising a strong IT security system so as not to put data at risk. There are tons of businesses offering these services as BYOD becomes more popular which has helped to drive the cost down significantly.
Train, Train, Train!
The reality is that the startup phase of any business always represents a steep learning curve for the owner. You’ll be faced with a number of new business practices and unforeseen challenges that will require you to either take on a potentially expensive professional or learn the skills for yourself.
The more strings that you can add to bow during this period, the less contractors and freelancers you’ll need to take on which, in turn, will save you a fortune. Of course, there are only so many hours in a day and you’ll eventually need to take on others to ease your own workload, but training in areas such as basic accountancy, financial management, SEO and even web design can be major pluses.
Many of these courses can be completed either face to face or through e-learning, so if you don’t have time to dedicate to classroom studies you can easily pick up the mantle from home at a time and pace that suits. [Ed – And we have just the right tool for you to search through those handy courses!]
Avoid Purchasing Brand New Assets
From plant and machinery in the construction industry to an intricate IT network within an office, purchasing brand new equipment for your startup business can significantly deplete your available working capital.
Whilst hire purchase and contract leasing are options often taken up by businesses to facilitate these purchases, there’s no denying that it would always be more preferable to avoid borrowing where possible.
There are literally thousands of reputable online and high street stores that specialise in the provision of second hand equipment across all manner of sectors and industries. You’ll find that many are able to offer refurbished and tested goods which can drive the costs down to a fraction of the original price.
Short term lease agreements are perfect for projects that require specialist equipment for just a few days or weeks, whilst allowing you to take on jobs that you may have otherwise needed to turn down.
Bring On Key Staff With Equity
There will inevitably be times when you’ll need to bring on essential staff to help with the launch and development of your startup business. Sales Directors, Finance Directors and IT gurus can be very expensive to employ, but if you’re short on capital then consider offering share options as a makeweight.
Now, before you panic about ‘giving away’ your business, remember that you’ll be exchanging business equity in return for the expertise and experience that could be the difference between flying high above the competition or a fast track to failure. It’s always better to have a slice of some pie rather than no pie at all, and you’ll then be left with a vast proportion of your working capital to invest in other areas of your business.
Consider one of our listed Entrepreneur courses to help navigate those choppy startup waters!