Launching and operating a startup business takes cash – and lots of it. Here are five money-saving tips you may not have considered when looking to manage your budget more effectively.
One of the biggest expenses for many startups is the cost of office or retail space, especially if you get locked into a lengthy five- or 10-year lease. If you sell a product, going mobile can help to lower these expenses.
If you sell a service, or your business is entirely online, you can work just about anywhere you have good cellular coverage and access to wifi. Take the case of “serial entrepreneur” Pieter Levels. He works entirely on the road, carrying everything he needs to run his businesses out of his backpack. His office expenses? Zero!
One practical option is working from home. If a business owner has a dedicated office space, they can deduct a portion of their home utilities, insurance, mortgage, property taxes as a business expense, which reduces business tax liability and saving money by not renting a separate office space.
Reduce energy usage.
Energy bills typically represent another high cost for startups. To see if you’re spending more than you should, ask your utility company to conduct a free energy audit for your business and recommend ways to lower power usage and your monthly bill.
During the audit, be sure to ask about off-peak usage discounts, which utility companies frequently offer to small businesses. Track your energy consumption throughout the day, and then ask for the discount when your peak usage aligns with the utility’s low-point usage. Some power companies will offer up to 2.5 cents less per kilowatt-hour for off-peak usage. That may not sound like much, but it adds up over time.
Convert to digital marketing.
Direct mail, print ads, cold calling and other traditional marketing tools generally take longer and cost more than digital marketing strategies. What’s more, they’re usually less effective. Startup companies can save a lot of money and grow their customer bases more rapidly by using newer technology tools like email, social media and search engine optimization. Google ads, inbound marketing, Youtube videos, Facebook pages, and even Twitter accounts can help you reach your customer base faster and for a lot less.
This may not work for every business, or even all employees of a business, but telecommuting can dramatically shrink overhead costs by reducing the size of your office space and the costs that go along with it. It can also help build employee morale, as most enjoy the opportunity to work remotely, even if only some of the time.
Cutting down on unnecessary meetings and the number of people who need to attend – whether in person or virtually – can also save money by enabling staff to work more efficiently. When employees sit in meetings they’re not being productive, and that costs you money that could be spent elsewhere.
Ask for a discount when you shop.
One of the best-kept secrets among entrepreneurs is that many retailers will offer discounts for small business owners – if you ask. In most cases, you’re more likely to receive a discount on equipment, computers, or other big-ticket items. However, other suppliers may offer wholesale rates when you mention that you own a small business. Either way, it never hurts to ask, and small discounts over time can add up to big savings.
At the same time, beware of buying in bulk, especially at big-box discount stores where the low cost per item can be hard to resist. Before making any bulk purchase, always ask, “Do we really need this much of this item?” As a small business owner, the preferred cost-saving strategy is to buy only what you need for today.
Bonus tip: Taking advantage of free software can save money by reducing the cost of buying the software programs needed to run your business. This includes open source software such as the Firefox browser or Thunderbird email program.