Many start-up companies launch with a dream, ambition, and limited funds. If that describes your story then it’s important you wisely budget your company’s finances. Always look for ways to keep operating expenses to a minimum, while maximizing your efforts to generate revenue.
Here are a few ideas that can help minimize your operational expenses:
1. Work from a Home Office
It can be tempting for a start-up business to prematurely acquire office space. If it’s going to be months before you have sufficient revenues, choosing to work from a home office is a viable option. I’ve been part of a number of start-ups where the owners worked from home for the first year or two. That decision led to substantial cost savings. On the flip side, I consulted with an organization where we secured office space too early in the start-up phase and were nearly crushed by the weight of the expense. We eventually transitioned back to our home offices to lower our overhead costs.
2. Learn a Few Skills
If the funds are not in place to pay for certain services, then try learning some of the basics yourself. For instance, many new business owners have saved significant costs by building and optimizing the company website and taking the initiative to operate all their social media accounts (Facebook, Instagram, Twitter etc.). The same could be true with bookkeeping. If you have the time, take a general course on business finances so you, or one of your partners, can manage the day to day accounting tasks. Check local colleges or university continuing education websites to find courses on social media and business finance training.
3. Wait to Hire Employees
Instead of hiring employees in the early stages of your venture, secure the services of independent consultants and contractors such as accountants, bookkeepers, business managers, marketers, and virtual assistants. Oftentimes a start-up does not have enough work to keep employees busy year round, so this is a practical alternative. Hiring skilled “as needed” will help you save on recruitment costs, training, and payroll expenses. Try connecting with other businesspeople online (i.e. LinkedIn or Alignable) to find a consultant, or search sites like www.upwork.com.
4. Scrap the Paper
Research has suggested it costs $20 to manually file a document and $120 to search for a misfiled document. If you lose that hard copy, it can cost you another $250.00. You can save time and money (staff costs, stationery, and print costs) by uploading documents and filings to Cloud storage systems like Google Drive, OneDrive etc. It is much easier and faster to search for a lost document in Cloud storage than physically hunting through your file cabinets.
You can also go paperless the following ways:
● Have paperless meetings.
● Use e-signatures.
● Switch to digital receipts.
● Scan documents.
● Use electronic accounting (e-transfers, online payments etc.).
5. Keep Business Travel Expenses to a Minimum
In the early days of your company, taking numerous business trips can put a strain on the budget. Of course, there are times when you need to sit across the table from someone to get a deal done; however, most communication can be done without having to leave your office. In today’s business environment, it’s standard practice (and necessary) to conduct most meetings online (i.e. Zoom, Google Meet, Microsoft Teams, etc.)
If you need to travel, here’s a few ways to keep the expenses in check:
● Use travel points.
● Avoid late bookings on flights and hotels.
● Don’t travel business class.
● Keep incidental spending to a minimum (meals, tips)
● Stay within walking distance of your meetings.