If you’re a small business owner, chances are you’ve already seen the dire stats regarding the survival of start-ups. We’re here to offer a dose of optimism:while it’s only natural that money concerns keep many burgeoning entrepreneurs up at night, there are certainly ways to practice economy in business to help ensure your start-up has a long and full life.
There are many articles that will outline the basic financial principles to follow to achieve success—frugality, accountability, transparency—but how do you actually implement these principles into your business operations? This is where the following practical and specific tips come in. Keep reading if you are keen to learn about five of the best ways to use the capital that you have.
1. Research before you say yes
In the name of saving time, it can be tempting to accept quotes from vendors or suppliers at face value. However, if you do this from your very first day of business, you will likely run out of money very quickly.
At first, you may feel uncomfortable about questioning prices proposed by vendors, especially when you have just started out and feel that your business reputation does not yet have much authority. Remember that you are allowed to barter with vendors for a lower price. If you seem to get stuck, threaten to move to another supplier: nothing encourages negotiation like the prospect of losing a customer.
Remember that even if you have just a modest budget or surplus income to pay your bills, you have a valuable service or product in your business itself. This means you can exchange your services/product(s) for those offered by other small businesses.
Since you are all in this exciting new world together, you may often experience a special generosity and exchange within the community of start-up owners. Establish and strengthen these connections by networking at local industry events—and even by introducing yourself the old-fashioned way by visiting and getting to know the other small businesses on your street. One final tip: always get multiple quotes for any large or ongoing expense (this goes for any kind of contract, including business loan contracts).
2. Economize key resources
Before hiring a person, think carefully about what you can achieve through digital or virtual means. For example, rather than employing a full-time bookkeeper, consider investing in reliable, affordable accounting software that will help you easily perform your own accounting tasks—such as paying bills on time, keeping business and personal expenses separate and setting aside expenses to pay business loans and suppliers.
If you are sure you need to outsource an accountant to help with budgeting, try hiring a virtual bookkeeper who will help you with tasks remotely. A virtual bookkeeper is usually easier to manage, since your essential budget breakdowns can be kept readily accessible on-screen. Hiring a virtual bookkeeper is also often much cheaper than an in-house accountant, and you will not need to make room in your start-up office for another desk.
Another way to economize is to personally take on the marketing of your business, instead of employing marketing staff. A full-time marketing manager may not be able to help you much when your business isn’t yet off the ground. Instead, take on the advertising yourself or share it amongst your existing employees who already have a deep understanding of what your company provides, and build up your inbound marketing.
Inbound marketing is a way to get customers subscribed to your product or service by offering exclusive content (such as an email newsletter), which is sent to interested contacts. Offer discounts to attract customers and to build a personalized relationship with your target base. It is also important to set some money aside for paid search marketing, which includes promoted posts on social media platforms like Facebook, and keyword advertising on search engines like Google.
3. Think outside the typical model
If your product or service doesn’t require a physical space for success, don’t worry too much about spending money to make your office front look stunning. You don’t need an office to be a respected business owner! In fact, many modern start-ups are established in the comfort of their inaugurators’ homes, or in shared or temporary working spaces which don’t chew up valuable capital.
We’ve mentioned co-working spaces; another option is to convert part of your own house into an office—which will help you avoid the cost of renting—or to use a shipping container structure for your office or retail kiosk. Shipping containers are an increasingly popular choice for entrepreneurs, since they are relatively cheap and easy to customize and decorate as you wish. If repurposed correctly, shipping containers can be remarkably aesthetically-pleasing: once you add some office equipment, you’ll be set for business!
4. Outsource employees
If you can hire employees to work remotely, you’ll save money on expenses like setting up office space. Outsourcing employees will allow you to cast your net wider than your immediate location when looking for applicants. This means that you will have greater choice, and hopefully, better-qualified and more efficient employees in the long run.
Remote workers will often accept a lower rate of pay than an in-house worker. This is not an excuse to be stingy: as a boss you should always pay your workers fairly—however, it does give you more leeway than you might have had otherwise. Just make sure that once you have secured these gems of workers, that you take advantage of modern technology and use tools like Skype and Trello to keep in close contact with them.
One more note about employees: hire interns! Colleges are full of business, marketing, accounting, and HR students who are hungry for work experience. As the owner of a (hopefully friendly and welcoming) small business, you can capitalize on this free labour. Most millennials have a great grasp of how social media and other digital platforms work, so if you’re smart, you can solve many of your marketing and advertising woes by getting some younger talent on board.
5. Remember: time is money
Many business owners have a far too literal concept of money. Especially in a small business context, your time and your employees’ time is expensive. This means you must schedule your own and your workers’ shifts purposefully. In particular, start thinking critically about the meetings chewing up your diary space. Do you really need weekly internal meetings, or would it make more sense to wait until the joint agenda necessitates it? Does every client meeting (apart from the initial) require an hour-long lunch outing, or can the same points be covered in a Skype session or even over email? Help meetings move quickly and productively by planning them from beginning to end (never set an open-ended meeting) and set a clear agenda that both parties have access to.
You may feel slightly militant by moving things along without time for a second coffee, but especially when your business is just finding its feet, you can’t afford to muck around after you’ve made deals and secured clients. The same goes for maximizing employee productivity. Use tangible memos such as email reminders and online productivity aids to communicate task details to each individual worker. Check in with them regularly to ensure that they’re not getting off track. Of course, the best thing you can do for your workforce is to model a productive work ethic yourself and to show a belief in the company that inspires others to work hard toward its success.
Cloe Matheson is a freelance writer from Dunedin, New Zealand. She loves writing pieces about business and career development. She is exploring opportunities and ideas that would help her to achieve her ultimate goal: to run her own successful business. Read more of her articles on her Tumblr.
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.