Where Can Companies Save Money When Starting Out?
When starting your own business, there are hundreds of things to think about and it can seem like the list of expenses is never-ending. From operational costs, to the cost of overheads, employing staff and getting your company’s name out there, there are many costs that need to be paid. However, if you are savvy, there are certain areas where you might be able to cut costs and keep your business more cost-efficient and today we hear from some industry leaders to get their thoughts.
“A company cannot run without people; however, when starting out a business, think about quality rather than quantity,” explains Elizabeth Cook, founder of finance startup, Funding Zest.
“When bringing people on board, it can be tempting to have a specific person to fulfil a specific role (and there is plenty to do); however, it might be better to look for the people rather than a role and see whether they might be able to fulfil multiple functions in the company.”
She continues: “Each time you employ someone, you need to think about their salary, tax implications and their specific needs. Therefore, having multiple permanent staff members can be expensive and labour intensive. When getting started, it might be worth considering which tasks need doing and whether any can be outsourced to freelancers. Not only does this keep your internal costs low, it also ensures that tasks are being completed by experts in their fields.”
“Sometimes when hiring staff, it can be better to look at an individual’s potential rather than their experience. Those employees who come with a wealth of experience and a back catalogue of impressive jobs will also demand a lot when it comes to salary and employee benefits. If you can invest the time in training someone up, why not opt for a recent graduate or someone who has been in the working world for less time. These employees are likely to be eager to learn and will not come with the same salary expectations as the more experienced workers.”
Negotiate with suppliers and providers
The saying “if you don’t ask, you don’t get” is worth remembering when starting a new business. From service providers to landlords to product suppliers, you are going to need to form important business partnerships with many different people - each of which come with their own cost.
For startups, speed is often of the essence. However, that does not mean that you need to jump at the first offer you receive. Make sure to negotiate as much as possible in order to get the best deal. Many suppliers will prefer to have guaranteed regular business at a slightly lower price than a higher price for only a few months. Don’t be afraid to discuss prices with suppliers and providers and see if you could negotiate a price and a contract that works for both parties.
Be savvy with equipment
“There might be certain essential equipment that your company needs. Take the time to shop around and ensure that you are getting the most competitive price for what you require,” explains Justine Gray, founder of consumer lending platform, Dollar Hand.
“Leasing equipment is always an option and could save money on long term maintenance; on the other hand, getting a slightly older model or buying equipment second hand could also work out as a cheaper option.”
“Is it essential for all of your staff to have an individual work phone or work laptop? In most cases, the answer is no. Think about how you might be able to make sure your employees have everything they need without breaking the bank and investing in brand new equipment for everyone.”
“Try to be as frugal as possible when thinking about the equipment that your team needs,” she adds. “Can you pay monthly or annually rather than committing to a large amount to free up your cash flow?
“Or can you purchase some equipment and then borrow money against it, again to free up capital?”
Think carefully about your 'office'
In an age where remote working is the norm, there is far less focus on the traditional office space. Depending on the type of business you have, there may not be a need for a physical office space and you could save a fortune on office overheads.
The majority of workers are used to remote working thanks to the events of recent years. Although there are definite challenges associated with a remote workforce, the money-saving aspect can be invaluable when getting your business off the ground. If you need facetime with your employees, consider alternative ideas such as co-working spaces or offices that have pay-per-day options.
If an office or physical premises is necessary for your company, see how you might be able to cut costs by thinking about the location, the property type and the facilities. Consider the purpose of the physical space as well as the requirements for size and functionality. If you are sensible about exactly what you need, you can avoid overpaying