Starting a business is exciting, but it can also be expensive. It’s possible to start a business with as little as a few hundred dollars, but most business owners will need to shell out tens of thousands of dollars just to get off the ground.
It’s true that there are convenient ways around this problem, such as making pitches to Angel investors and venture capitalists or taking out loans from the bank. But if you want to maintain as much ownership of your business as possible and remain independent, your only real option is reducing the costs of launching a new business.
So what are the best ways to do it?
General Strategies for Reducing Expenses
These are general strategies that can help you reduce expenses in many areas of entrepreneurship:
- Embrace minimalism.
Try to embrace a minimalistic mindset. As you’re starting a business, you may be tempted to buy a lot of new things, sign up for many subscriptions, and overestimate your business needs. Instead, it’s better to buy only the things that you truly need and expand only when necessary. Do you really need an office or can you tolerate working remotely? Do you need to hire nine different people right away or can you get away with only three important roles? Remember, you can always upgrade and improve later on. - Shop around.
Always take the time to shop around for different options, no matter what you’re purchasing. For example, if you know you’re going to need inventory management software, take advantage of free trials from many different inventory management software providers. You’ll discover a wide range of competitors with different strengths and weaknesses, and even more importantly, different prices. - Negotiate.
Don’t hesitate to negotiate, even if it feels like your purchase is not negotiable. Sometimes, asking for a lower price is all it takes to get one. The worst case scenario here is that someone denies your request, which presents no expense to you other than a temporary inconvenience. If you get good at negotiating, you may be able to reduce expenses in many different areas of your business. - Barter.
Why pay for something when you can simply barter services you naturally provide? Many small businesses and new businesses are willing to trade services, rather than charging real money. You may be able to partner up with other entrepreneurs in the area and reduce expenses for everyone simultaneously this way. - Lease instead of buying.
If you’re thinking of getting an office, or purchasing expensive equipment, consider leasing instead of buying. With this approach, you won’t physically own the property, and you may be restricted on how you use it, but you won’t need to save up a down payment, and you may be able to reduce maintenance costs as well. - Maximize efficiency.
Brainstorm with efficiency in mind. Is it better to hire two specialists for two different roles, or list who can do the work of both? Is it better to subscribe to two different types of niche software or a single all-in-one platform that does everything? - Work with advisors and mentors.
Advisors and mentors are indispensable resources when starting a business. Make sure you consult with these seasoned veterans to get their perspective and come up with new ideas for cutting expenses and improving your business overall.
Identifying Your Biggest Expenses
it’s also a smart idea to identify your biggest expenses, so you know which costs are most important to control period for many businesses, these are some of the most notable and impactful expenses:
- Equipment.
If you need equipment to manufacture a product or provide services, you won’t have much wiggle room. - Property.
If you need a factory or office space, your biggest consideration is going to be location. Some locations are many times more expensive than others, and if you’re willing to relocate, you may be able to operate much more efficiently. - Insurance, licensing, and permits.
Insurance, licensing, and permit costs aren’t exactly avoidable, but you may be able to reduce them with some clever strategies. Consult with your lawyer and with your insurance agent to work out better angles. - Labor.
You probably don’t need to hire a full team to get your business started; Since labor is going to be one of your biggest expenses, it should also be treated with minimalism. - Marketing and advertising.
Don’t avoid marketing and advertising entirely; just focus on cost-effective strategies at the beginning.
You’re never going to get your business expenses down to zero, but if you can cut them in half, you’ll be in position to start a business without assistance – and with a much higher chance of becoming profitable early on.
These strategies can help you, so make sure you do ample research and adequately prepare for the expensive realities of business ownership.
