One thing that often keeps people with great ideas from starting a business is how much it can cost to do so. Unless you have robust savings tucked away somewhere, your only options are usually to take out a business loan, look for investors, or wait until you have enough.
Alternatively, it may be a good idea to choose a business that isn’t capital intensive if possible. If you finally do have enough to start, it’s still crucial that you learn to manage what you have. On that note, in this article, you’re going to find out how you canstart a business on a budget with our seven essential tips below.
- Have a Clear-cut Budget
To begin with, when starting a business, you need to have a clear-cut budget. If not, you could end up spending more than you’re making which is often a recipe for bankruptcy. When creating a business budget, you need to start by tallying your prospective income sources. Doing so gives you an idea of how much you’re predicting you’ll make on a monthly basis. Once you’ve done this, make a list of your fixed expenses which are ones that aren’t likely to change every month. It could be anything from your electricity bill to how much you pay for water. The last two steps would be to include variable expenses which typically don’t have a price tag and predict one-time spends as well. Once you know what your incomings and outgoings are, it’s your job to stick to the set budget.
- Use Second-hand Equipment
One of the things that are going to be an upfront cost when you start a business is equipment and furniture. Try and see whether you can get either second-hand. It isn’t uncommon to find such in good condition or even close to brand new. You will need to check your local charity shop or sites like eBay depending on what items you’re looking for. However, when buying second-hand equipment, do thorough research and make sure it’s in good condition. If not, you may end up spending twice the amount trying to replace something that doesn’t last. Leasing equipment is another option if it wouldn’t be worth the investment to buy it brand new. If you had a restaurant, for instance, ice machines, dishwashers, and coffeemakers may be better off leased.
- Consider a Mobile Office
One of the most significant expenses that may come up in business is that of getting an office space. It can be relatively expensive, especially if you don’t have a lot to spend. In light of this, why not consider getting a mobile office instead? Mobile offices are more or less portable trailers that can be used for office operations, storage, restrooms, or temporary classrooms. Also, they could save you a significant amount which could be reinvested in other areas of your business. To learn more about how you can find one and how much they cost, check online or ask for referrals.
- Wear Several Hats
When starting a business on a budget, it’s unlikely that you’ll have tons of money to spend on hiring staff. The process of recruiting alone can cost you, so only focus on hiring staff that you absolutely need. It means that you may have to wear several hats and perform a variety of tasks. For example, you may need to double as the accountant and HR manager at the beginning stages. Regardingtasks that you may not have the expertise for, you can outsource and hire an independent contractor to do the job on a product cost basis. Remember, hiring more employees means more paperwork, tax forms, and expenses which you should be trying to avoid.
- Save Enough
The reality is that in the first couple of months and even years of your business, you may not be able to pay yourself. This is because before you break even and begin making any profits, it could take time. However, by saving enough before starting, you know you have enough to keep you going financially until you make enough to pay yourself. Good savings tips that could help you save as well as help when running your business are to differentiate wants from needs, learning to use cash or check, and always looking for a deal that enables you to save.
- Hire a Good Accountant
For any business that is on a budget, finances should be taken very seriously. It’s the only way that you’ll be able to stick with your budget and ensure the money you have is being managedmost effectively. As mentioned above, if you’ve got accounting skills, you could take it up on your own. However, it may be best to outsource to a professional accountant who can identify any grey areas and loopholes when needed.If you can’t afford to hire one fulltime, do so on a contract or freelance basis. Alternatively, look for a recent graduate who has potential and see if they can grow with you. Qualities of a good accountant are someone that pays attention to detail, is familiar with business practices, and has data analysis skills.
- Look for Alternative Software
Technology is one of the things that makes any business succeed in this day and age. Software, especially, can help streamline processes, manage data and automate mundane tasks. On the other hand, software and tools can be relatively expensive, especially for a business with a small budget. You should, therefore, think about seeing if you can get software for a monthly fee instead so that you can use it for the time you need it and avoid the sometimes substantial upfront cost. Cloud apps, for instance, let you pay on a monthly basis and you can scale up and down as you please.
Starting a business isn’t the easiest thing to dobut taking the right steps can make it easier. One of the hardest parts about it can be the lack of finance at times. However, if you look for ways to be cost-effective and cut down on expenses, you could be the owner of a successful business.