Budgeting hacks for startups and small businesses

When you’re a small business or are just setting up your startup, it’s imperative that you don’t spend money unnecessarily.

Below are just some of the ways you could cut your costs. However it’s worth considering whether you are trying to save money for the short or long term. For example, buying your own premises may save you money years down the line, but it’s is a huge upfront cost that most businesses would not be able to fund in their infancy. Therefore, most businesses will opt to rent a unit or office for their business, or even work from home.

When considering how to reduce your startup and ongoing costs, tailor these suggestions to your business and don’t forget to keep evaluating your needs, as they often change as your business develops.

Equipment

This might include IT, office equipment or machinery to produce your goods. One consideration is whether to buy or lease. Just as with buying a premises, buying the equipment you need may be cheaper in the long term. However, if you lease an item, e.g. a photocopier, maintenance should be included within the hire cost, so it could work out as more economical, as you wouldn’t be responsible for maintenance or parts. Similarly, if you rent a serviced office, furniture is included within the price, so you don’t need to worry about this.

If you want to buy your equipment, one way to save money is to purchase the item second hand or reconditioned. This can save you money without compromising on the model or specs that you need/want. You could also consider whether you could compromise and buy a cheaper version, e.g. do you need the latest tablet for your business? You may be able to get a better deal on a previous model. Whatever you decide, make sure you shop around to get the best deal.

If you have a team, rather than buying equipment for all everyone, you put systems in place to enable them to bring their own device to work. Some staff prefer this and it will you money on equipment – you just need to be careful about security.

Employees

If you need support for your business, but aren’t sure whether you can afford or if you need a permanent member of staff, look at these different staffing options. For example, while you may generally pay a freelancer slightly more than you would a permanent member of staff, as you would only be paying them for set tasks; it may work out to be more economical overall. Plus, you would be making cost savings on your premises, as you wouldn’t need to assign them desk space.

Alternatively, if you have enough work for employees but not the skillset you need, consider offering training to new or existing staff.  This not only helps to develop your staff and increase their job satisfaction, it may also be cheaper in the long run. With increased satisfaction, your staff are also more likely to stay with your company. 

Your premises

Where you work may or may not be something you can compromise on, depending on the type of business that you run.

Swanky premises in the centre of town are likely to be more expensive than further out of town. Fully serviced offices mean you don’t have to worry about setting up your office, but a managed office gives you the ability to furnish your workspace how you want and you could save money by organising your own IT/telecoms providers.

Work out how much office or workshop space you need so that you’re not paying for square footage that you don’t need. Before you sign up to a lease or licence agreement, it’s also worth investigating whether there is any flexibility to expand or reduce the size of your unit in the future, to match your requirements to any changes within your business.

If you’re not likely to have many meetings with customers or suppliers for example, you could save money by basing yourself in or near a business centre with affordable meeting rooms that you can hire when you need them. On the other hand, if you’re planning on numerous meetings a week, it may be more economical to include space for this in the unit that you rent.

Alternatively, if you don’t need professional workspace, you could save even more money and work from home. Depending on the needs of your business, you could rent a virtual office or hire a virtual assistant to help you convey a professional image for your company. This could be particularly useful if you travel a lot as part of your business, ensuring you don’t lose any customer queries or leads.

Buying in bulk doesn’t always make sense

If you know you’re going to need the items and that they’ll be usable when you come to need them, then buying in bulk could save you money. However, this isn’t always a sensible way to save money. For example, if you’re producing some marketing materials for your business e.g. flyers, the more you buy over a certain amount becomes cheaper. However, there’s no point buying an extra thousand flyers if realistically something may change by the time you want to use them, e.g. if you’re advertising a seasonal promotion. Plus, you need to make sure you have room to store the extra items.

Other ways to reduce your overheads

• Don’t forget to cost your own time. Your time costs you money, so make sure you’re using it wisely. Check that you’re spending most of your time on the things that matter most to your business. If not, evaluate what you can change. Could you outsource something that’s taking up too much time or delegate to a member of your team?
• Reducing your utility bills by adopting energy saving behaviours to save you money.
• Use free or discounted services where you can. For example, many small businesses use the free version of Skype or Google+ hangouts for video conferencing. You could also benefit from buying packages from suppliers, such as phone and broadband deals.
• Shop around and haggle. It’s worth taking the time to get more than one quote and there is often room for negotiation. If you just accept the first quote, you’ll never know how much more you could have saved.
• Reduce unnecessary charges. These include credit card fees and bank charges. Make sure you’re not paying for anything you don’t need and take advantage of 0% credit card transfers if you have run up money on your card. Most importantly, stay on top of your bills and seek help straight away if you think you’re in trouble.
• Manage your inventory. If you stock items to sell or items to make your products, only stock the amount of each item you need. This way you avoid ending up with unnecessary items taking up valuable space.
• Double up where you can. You can promote your latest offers on your invoices, or send invoices electronically to save paper. Many businesses are coming up with novel business cards that provide the traditional information, but also showcase a key feature of their business strengths.
• Try free advertising routes. On average, consumers need to hear your message and branding several times before they consider buying from you. So maximise this by using free or low-cost channels where you can. Social media is ideal for this and allows you to reach both current and potential future customers. Using multiple social media networks increases the likelihood of your message reaching your target audience.
• Travel sensibly. If you need to travel for your business, calculate which mode of transport is most economical. Generally annual train tickets save you money, but only if you use the train all the time. When you’re calculating the costs of driving, don’t forget to include car insurance, tax and maintenance as well as fuel. If you can, don’t travel in peak hours to avoid higher train fares and longer car journeys.
• Monitor the small, regular spends. This might be things like stationery or tea and coffee for your staff. Make sure you’re not buying things unnecessarily and that you’re getting a good price for the items you are buying. Even small savings can add up over the year.
• Make use of your network. If you have good connections, they may be able to recommend suppliers or employees when you need them.
• Pool resources. If you’re planning on sending out a mailshot, is there a relevant company (not competitor) planning to do the same? You could agree to send out your materials together, so that you both save money.