One thing that every entrepreneur will do after ascertaining that the business is viable, is to reduce the startup cost. The amount you will require to start a business and keep it running will highly vary from one industry to the other and from one place to the other.
When planning your business, it is important you think about all the possible costs and then consider the amount you already have. A large number of new businesses will fold as fast as they open. Statistics show that around 80% of new firms collapse within the first year of operation.
Poor budgeting and unexpected costs are some of the reasons why the businesses fail. To avoid being part of the statistics, ensure that you have enough viable cash. So, which are the costs to consider
When setting up a business?
No business is like the other, and each business will have specific cash needs at every development stage. Therefore, there is no universal way of estimating the startup costs. Some business will require smaller setup budget while others will need considerable investment in equipment or inventory. The other costs will include building renovation or acquisition cost or purchase of business long-term equipment.
Estimate the expenses of doing business within the first few months to know the amount of seed money you require. You will incur some of the costs, such as incorporation costs and the sign design cost, only once. However, many other costs such as inventory, utilities, and insurance costs are recurring.
When identifying the costs, decide on whether they are optional or essential. If your budget is realistic, it should only consist of the things that are important during the startup. The important expenses are of two categories. They include fixed costs such as utilities, rent, insurance costs and administrative costs. The other category is variable costs, which include shipping, inventory, packaging, sales commissions and any other costs associated with direct sales of services or products. List your costs on a worksheet and differentiate the one-time costs from the ongoing costs.
Reducing the startup costs
A small business will enable you to follow your passions, build your ideas and be your own boss. Besides, they are the economy's backbone. Even though the businesses are expensive to startup, you should not rob a bank or decimate your savings. With effective strategies, you will be able to minimize the costs. Consider the following:
Outsource Labour from Online Sources
One of the most expensive costs for any business is marketing and advertisement. Such like costs can be reduced by turning to the plenty of online job centers for cheaper services, like website designs and website content. While web design companies will charge between 1000 GBP and 3500 GBP for a basic website, the online workforce can do the same job with just under 2OO GBP. Now, however, there are many website builders that give you all the tools to create you own site free of charge or for very small sums of money. What's more, these sites also have the look and feel of professional websites, which makes them an enticing proposition for any start-up.
Articles and other website content can also be obtained at a lower cost from any of the available freelance sites, with some offering as low as 0.80 GBP per article.
You could also outsource SEO, PPC or other marketing services, and get more for the same price as hiring locally.
Use your home as an office
Speaking of operating costs, one of the biggest expenses for start-ups is the rent they have to pay for occupying a certain space. Since we're aiming for a stripped-down business model here, the easiest way to eliminate these costs is by using your own home as an office. If you can't stomach the idea of working from home, consider renting a space at one of the many work hubs that have become popular throughout most urban areas.
Be prepared to do much of the work yourself
That being said, you are kidding yourself if you believe that someone else will do all the heavy lifting for you when it comes to your own business. Every self-respecting entrepreneur knows that hard work and dedication start at the top, so be prepared to put in long hours and do most things in a DIY fashion if you want to save money and inspire those around you at the same time.
Hire a contract professional
To save more money, hire contract professionals including accountants and IT professionals. They will help you identify deductions you might not have noticed at first. The main benefit is that, when professionals work on contract basis, they can be dismissed if they become unproductive. This may entail signing of performance contract to ensure every employee is productive.
Prioritize the startup expenses
Make a list of the items your business requires to start and function effectively. The items include computer equipment, office supplies, POS systems, business software and furniture. Create a budget that accounts for them. Decide on the financing option.
As you can see, you can drastically lower the cost of starting up a business if you follow the principles listed above. If your enterprise idea cannot operate under such circumstances or if you're targeting a pricier business model, there's always the solution of finding an angel investor or a business partner who can help you dreams come true. Either way, giving up should never be an option.
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