If you wake up in the middle of the night with a great idea, but feel stricken by the fear and cost of setting up a business and making it work, you can rest easy because there are many shortcuts for starting up a business on a shoestring.
Bonus Tip: Head this key message first:
Keep your overheads down
Here are 5 savvy tips for start-ups on a shoestring
Tip One: Choose your office space wisely
As appealing as having a huge office may be, and though a premise is tax deductible, this is a weekly ‘overhead’ that can prove stressful and expensive to meet when first embarking on a business. Also, if your business is a product where you must house stock, there is also the associated cost of having to find a larger premise. If you don’t do that you may have to house the stock in your actual office space, which will lead to these goods impeding on the efficient administration and professionalism of your business. Physical clutter in an office will lead to mental clutter, which isn’t good when starting out for the day in business.
A solution and a way to reduce overheads is to store business equipment or product at an off-site secure storage facility. Companies such as Fort Knox offer clean, safe, and easy to access storage facilities, which protect your stock. The costs of storing goods this way is far less than buying or leasing a large office space.
Tip Two: Watch out for credit card debt
Newbies to business often fall victim to the temptation of covering expenses using credit. This can prove a fatal move for a new business. Expenses such as office furniture, computer, telecommunications and supplies can quickly mount up, but it is not good practice for a start-up business to try to purchase everything at once using a credit card. A business will always be playing ‘catch-up’ from the get-go. Instead, it is more financially smart for a company to finance expenses once the revenue starts flowing in. This approach does mean that the business may have to wait for some things, but with the burden and stress of debt removed, the likelihood of a business being successful much greater.
Tip Three: Avoid paying for marketing and advertising
Marketing can be costly for a business, but there many ways to grab a customer’s attention without outlaying huge sums of money. Social media has created very cost-effective ways to expose your business to thousands of new customers, while also allowing you to connect with existing and potential customers who are using social media daily.
Also establish relationships with as many local media contacts as possible. By submitting stories and case studies about your business, they can present you as the local leader of your field and you will receive the benefit of free press (PR) on local radio or in the newspaper.
Tip Four: Prepare to work hard
For success, hard work is fundamental. This applies to every business, but is particularly relevant when you are starting a business with little capital. You really will need to commit to making your business a success and contributing to every area and task of the business. Also be prepared to learn as many skills as possible. Outsourcing skills at the beginning can also prove fatal to a business in its early stages. Plus if you learn these skills you will have a much better understanding of these tasks, when you outsource them down the track and when you have to provide briefs to suppliers and contractors.
Tip Five: Consider hiring sub-contractors
If you need staff for your start-up, it is often viable to work with independent sub-contractors rather than employ people. Typically, you are required to pay a range of insurance costs, taxes and other benefits when your business has employees. Plus if they don’t work out, it can be very difficult to get rid of them without good reason.
With contractors (subbies), you will only need to pay a wage. The modern convenience of the Internet means that consultants may work externally and be well-matched to the needs of your business.
Owning and operating your own business can be expensive, but there are ways to limit and reduce the start-up costs incurred.