Starting your very own new business is an exciting time, but what isn’t so enjoyable is working out how you’re going to pay for everything that you need to get things going. It can cost thousands and thousands in the beginning to get everything up and running as you want, and then all of this will need to be made back later when you’re actually making money.
Ultimately, the less you can spend on getting things going, the better. You’ll earn profits sooner, and things won’t be as difficult in the beginning, as you won’t need as much cash. Here are three cost-cutting tips you should follow when starting up a business:
Be Tight With Your Money
The first point is obvious really. Don’t go spending money on things that you don’t absolutely need. If the bank has given you a figure for what they’ll lend to you for your business plan, then treat that as a maximum, not a target. Absolutely everything that you buy should have a solid, documented reason behind it, and it needs to fit with your business plan. It’s never too late to start looking for cheaper items than you’d originally budgeted for. Office furniture for instance can be very expensive indeed, but if you buy second hand when other companies go bust, you can save a fortune, without actually losing out on anything. If you always keep in mind the fact that every penny extra you spend will delay the time it takes until you’re making a profit, it will help keep you from overspending.
Spread Out Those Payments
The other really important thing to bear in mind is that not everything has to be paid for up front. It’s often entirely possible to spread out the payments of some of those important items month by month. Vehicles for instance, are potentially a major component of your business, and they can be one of your most expensive assets. Leasing them with a company such as LeaseVan can remove that upfront issue, and potentially make things cheaper and better for you in the long run. There are lots of other things that can be done in this way, but make sure you keep track of those monthly outgoings; they can rack up pretty quickly if you aren’t careful.
Buy or Lease?
When you are putting costs into consideration, one question that is often come up is: “Should I buy or lease?” The issue of buying vs. leasing always occur when you are considering business equipments, including business vehicles. There are pros and cons that follow your decision, and it’s all coming back to the questions you should ask to your supplier: What type of lease do you need? Are there any buyout options? …and so on.
The point is, you need to know what kind of impact do you want on your cash flow.
To conclude, reducing those upfront costs is all about planning payments carefully, taking advantage of monthly options, and sticking to a rigid business plan without getting carried away. Remember, cutting costs is not all about the how-to’s. It’s about better-scheduling your expenses – and lowering costs in the process.
Photo credit: Scott W. Vincent / Flickr