From paying vendors and tracking daily expenses to hiring someone who knows how to build a website, new business owners can find it difficult to save money in their 1st year. If funds are insufficient going into the 2nd year, the company may struggle to keep operations going smoothly.
In this article, we’ll provide several tips that can help your new small business cut down on costs.
1. Pick an Ideal Location
Ideally, a new business should be close to its customers’ locations, making it easier and more convenient for them to find it and reap the benefits of its products and services. Select an affordable area with lower rental fees and land rates. Avoid poorly lit or smelly areas and neighborhoods that have a high crime rate.
Learn about the local regulations you need to comply with, including payments owed to the government, so you don’t get fined. Also, consider choosing a location close to your suppliers to save money on shipping costs. Since the global eCommerce market has been growing steadily over several years, an online store might be a better choice, as it will spare you the overhead costs of a physical business.
2. Create a Financial Plan to Protect Your Cash Flow
It’s crucial to create a plan for maintaining your business’s cash flow. Prepare your budget, know how much money you have, and try to predict your expenses. Think about the amount you’ve set aside for emergencies and the insurance policy your business can afford to pay for. The insurer may be willing to customize a policy that suits your business and finances.
Negotiate with vendors to secure value-for-money deals, and take into account shipping costs and related expenses such as payment processing fees. Review products and services you’re subscribed to and cancel the items your business doesn’t need. There’s always a business promoting the next big solution—an app, a product—but evaluate whether it will benefit your company and how it will impact your budget before buying.
3. Streamline Your Business Operations
Costs begin to stack up when a small business is not operating efficiently. Inefficiencies stem from unplanned hiring, reckless spending, inadequate procurement policies, dysfunctional departments, and other issues. Human resources should know why they are hiring and how much the company can afford to secure the top talents. Hiring external workers for problems that can be fixed in-house will cost the business money.
Conversely, external services can be more affordable and provide quality solutions—for example, trading on-premise data storage for cloud storage solutions. Consider buying bundled services, such as phone and internet data services, to land better deals. Make early payments to avoid penalties and check whether one of your service providers offers discounts for paying early.
Find an accountant or tax expert to track your finances and identify legal tax deductions to save you money. Moreover, establish your legal department from the get-go to guard against lawsuits and expensive arbitration costs. You don’t want to incur unexpected charges for an avoidable copyright infringement.
4. Build Your Small Business Website at Zero to Low Prices
In the digital age, every business—no matter the size—must have a website to boost its brand, establish credibility, promote itself, and deliver strong customer service. A website not only helps you make money but also helps you save money. You’ll be able to market and sell your products, share information, generate customer insights, and maintain visibility. In the past, you would have had to pay someone to do all of this for you.
It’s easier to build a website for a small business now than it was in the past. One had to search for a web development company and pay exorbitant fees only to get a website that didn’t live up to their expectations. Website builders solve that problem by providing templates, themes, pre-built websites, and drag-and-drop website editors.
Look for a website builder that offers value for money, simple-to-use interfaces, comprehensive customer service, extensive features, and attractive design templates.
5. Understand Your Market
Product research will save you a lot of money from promoting something no one is interested in. Conduct surveys, perform beta tests, and ask friends for advice to be sure the market needs what you are selling.
Find out how you can improve the product or service before launching. Subtle changes in packaging, for example, can affect whether or not customers buy your products. Research your competitors to uncover any low-priced production solutions or services they may be using to reduce your product development or service costs.
6. Establish Mutually-Beneficial Business Exchanges
If you’ve built a network of business relationships, you can leverage them to barter your goods or services. For example, if your small business does content writing, you can offer to test another company’s editing software that’s in development. That way, the other company benefits from getting feedback on its product, and your business saves money on editing costs.
Furthermore, you can earn money by referring services to other companies in your network. For example, recommending an affordable website builder like HostGator to your network will enable you to earn a commission when they use your link to buy something.
7. Search for Free Online Solutions
Small businesses can save money by finding free solutions for their operational needs. While free stuff has limitations, you may still find valuable free resources, software, and information online. In addition to free trial periods, top software companies offer free versions of their services with some essential features before giving one-off discounts to upgrade to their premium options.
If you are comfortable going the do-it-yourself (DIY) route, cut costs by handling some of the business functions yourself, such as doing your own content writing or marketing. Be careful with DIY, though, because some actions might land you in legal trouble.
Additionally, you can obtain free guides or attend free webinars from reputable companies to learn about improving your business processes instead of paying for expensive training programs.
8. Market Your Business for Free
You don’t always need to pay for effective marketing—you can still succeed without spending a dime. Social media marketing is one example, whereby you only need your free social media page and engaging content to attract potential customers. If you’ve built a business website using the free version of website builders like Wix, you’ll get a beautifully-designed platform, which you can use to write content and promote your small business at no cost.
Create a buzz around your company and save on marketing costs by using word-of-mouth and user-generated content (UGC). Talk to happy customers and ask them to leave a positive review online. Check the comment sections of your social media pages and business blog to engage your audience and enhance brand loyalty.
If you are comfortable with public speaking, set up a free YouTube account and create video content about your business. Try hosting webinars or get yourself invited to discussion panels and TV interviews to brand yourself as an industry expert. Boosting your public profile will promote your business at no cost.
9. Hire Independent Contractors
Independent contractors can save you money over in-house employees who require salaries and benefits such as medical insurance. Remote workers can provide marketing, customer care, writing, designing, and other services at lower prices than paid staff.
The challenge is finding the right contractors for your business. Start by researching content writers and writing agencies. Look at their experience, communication skills, and online portfolios. Ensure you understand the remote worker laws in your area to avoid being flagged for tax and work violations.
10. Reduce Your Company’s Paper Footprint
Businesses can drastically cut their spending by digitizing their operations and using paper efficiently. The ongoing global shift to sustainability is encouraging everyone to protect the environment. Companies can reduce their paper use, which contributes to deforestation, pollution, and waste.
Digital solutions such as electronic invoicing and e-banking can protect against fraud prevalent in paper financial statements. While online banking also requires a level of care to protect yourself from cybercriminals, using eStatements may save you from paying the bank fees that cover the cost of mailing paper statements. Companies can also use digital visitor logs instead of paper sheets and opt for online collaboration tools and Portable Document Formats (PDFs) instead of printing paper documents.
Saving money in your 1st year is vital for your small business’s survival. Unforeseen circumstances may hurt your remaining cash flow and cause the company to fail. Launch your business only after finding an affordable location and confirming your product is needed in the market. Establish your online presence using a top website builder.
Budget in advance and streamline your business operations to cut down on unnecessary expenses. Use free online options and marketing solutions. When possible, consider outsourcing to save money. These solutions can help your small business make it into the second year stronger.