As a daring entrepreneur, you should be ready to take up a range of financial challenges that may come your way as you start building your startup from scratch.
The sooner you adopt the fluid mindset, the easier it will become to overcome budget limitations.
If your freshly set up business has started leaking money on all sides, here are some cost-reducing strategies for initial startup expenditures.
Let’s assume for a moment that you do not have the necessary resources to bootstrap your startup business. The next best place you can look for financial backing is the close circle of family and friends.
While you may not get the necessary money, the conditions for debt return will definitely be more flexible and renegotiable.
Even better – if a family member or a friend is ready to invest a sum of money as a gift, you are off to a good start and, considering that no return is looming over you in the immediate future, this can be seen as a solid cost-reducing strategy.
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Most eager entrepreneurs nurture their
However, as the company expands and profits begin to come in, the cramped spaces become claustrophobic and the startup needs to be moved to more appropriate premises.
The smart ‘transitory’ step before your own building would be to share office space with another thriving business.
Ideally, you can even find an incubator (or accelerator) company to take you under its wing and offer you administrative infrastructure and contacts.
In any case, this doesn’t only cut costs but it also gives you and your employees a chance to network and
Get the best deals for equipment
It is astonishing how much money can be lost on inopportune equipment purchases. Just as you need to adopt cost-reducing strategies, you also have to be smart about exploiting deals and offers.
For instance, when I was recently looking for office supplies, I found out that
In addition, the best strategy to purchase both furniture and smaller items is in bulk.
This is why you should sit down and think long and hard with your associates before you compose a list of items that you need.
Purchasing in tiny bursts and smaller quantities will bleed you dry.
Full-time employees might be an unnecessary expenditure at first.
While you do need assets in human form in order to help your company grow, it may be more financially prudent to collaborate with part-time employees and freelancers.
This way, you can save a staggering amount of money – up to 30% on each individual.
Keep in mind that full-time employees require a full-time salary that comes with paid leaves, benefits and other expenses.
Be smart about hiring
Once the time comes to hire full-time employees over freelancers, you have to do it right and think cost-effectively.
Absolutely avoid hiring friends and family just because they can be more cost-effective (and this is not always the case anyway) since they will probably be a far cry from the professionals you require in order to launch your startup properly.
Their inefficiency, no matter how small it may appear in the beginning, will compile incrementally and actually cost you more in the long run.
Hire people that you feel can contribute with their efficiency, knowledge and skill, and consider only those that you feel are reliable. The longer they stay with the company, the better.
Do everything you can to automate the processes
Thankfully, we live in the time of digitalization when many administrative and logistical processes can be automated through the sheer power of programming.
By automating business processes like accounting, payroll, administration and some facets of security, you will save time and eliminate the need for more employees in the administrative sectors.
Apart from that, the added bonus is that your company’s daily operations will become much more accurate.
Stay on course
It goes without saying that planning technical and administrative matters such as insurance, salaries, utilities and contractual specifics can appear insignificant if your startup has only begun to show its promise, but this is actually far from the truth.
The sooner you begin to plan for such matters, the more money you will save in the long run!
Smart and efficient planning is what makes any business float safely. What you need is a sound business strategy with fleshed out rules, but you also have to keep the framework loose enough to alter course easily once the financial problems rear their ugly head.
While you cannot hope for a streamlined, linear development curve of your startup, you can at least adopt some reliable strategies to reduce initial costs and get your company off the ground.