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Starting a business can be an expensive undertaking with many outgoing payments to consider.
When getting started, being money efficient is of the utmost importance. Here we share some of the best ways to save money as a business when starting out and the areas where you might be able to cut back.
Set a budget and stick to it
The first step to saving money when starting a business is creating a budget. Learning how to budget effectively is a great habit to get into – not only will it help you save money in the initial stages of the company, getting into the habit of setting and following a budget will help you save money in the long term and make your company as cost effective as possible. Budgeting is a way to organise your money, stay conscious about how much you are actually able to spend and analyse your expenditure.
When setting a budget, try to be as realistic as possible. The key is to strike a balance between being frugal and saving, but also having enough money kept behind to be comfortable and cover your expenses.
Firstly, determine your monthly income. Then, calculate your fixed expenses such as rent, car payments and utility bills as well as contracts you may have with suppliers or for essential services. Knowing how much money you have coming in, and how much money you spend on essential items will help you assess how much you have left. Any leftover money will need to be divided between non-essential items (any extras that you may need when setting up your business) as well as saving for the future of your company.
Remember, there is no point having a budget if you do not stick to it so make sure you follow the budget once you have made it. If you find that you are not working to your budget, you may find that you need to adjust it.
Make technology work for you
Technology is ever-advancing and there are countless ways to utilise technology for your business. One way to do this is by automating your payments. Setting up automatic monthly payments to cover your essential expenses such as paying suppliers, paying for your website domain or covering rent or utilities for your business premises, can help you stay on top of your finances.
If you make payments on time each month, it makes it less likely that you will fall into debt and have to pay costly interest fees. All of this will prevent debt problems for your business and help you save money in the long run.
You can also use technology to power your workforce. When starting a business, you do not have the resources to cover the costs of a large team and may be operating as just a few people. If this is the case, it may not be worth paying for an office space where you have the pressure of covering bills for rent and utilities.
Instead, you could use technology resources to operate a remote workforce. With so many tools available to create an efficient remote workforce, this could be a great way to get your business started while keeping costs low.
Dream big, start small
As an entrepreneur eager to get your business started, it’s normal to have lots of aspirations and goals. Although this aspirational approach is a great way to get your business started and get your ideas off the ground, you also need to be focused on saving money and building a strong foundation for the future of your business.
One way to start small is to be realistic about what is achievable. For example, you may not have the time, money or human capital to achieve everything all at once. Instead, think about your personal strengths and weaknesses – you can structure your business around your skill set and prioritise tasks that you are capable of doing before thinking about bringing on new employees. This also applies to your budget – be realistic about where you could be more frugal and where you absolutely need to invest money.