Three ways to cut start-up costs

Three ways to cut start-up costs

You need money to make money; that’s what we are always told. However, starting up a new business is an expensive venture. Here are three specific ways that you can cut costs during this time.

  1. Buy used items

When furnishing your office, merchandising your store or investing in electronic equipment, look at used or rented options. Having the flashiest items isn’t a necessary use of your money, especially when you are just starting out – in fact it’s an impractical use of cash that could be used elsewhere.

Being frugal in the beginning is necessary in creating a successful start-up business as you can then spend that money on other, more important, things later down the track.

Where you can look for used items

  • Auction websites such as eBay and Gumtree have a huge range of items in all different kinds of repair.
  • Thrift shops sell second-hand items cheaply. You can sometimes even barter with them.
  • At physical auctions you can set yourself a budget and only spend that much.
  • Display furniture stores often sell ex-display furniture etc for discounted prices.
  1. Hire smart

Employees and their salaries can cause a distinct increase in outgoing cash, but they don’t have to. If you are smart about who you hire you can cover all the bases with a select few employees who are able to cover the fundamental roles well.

Without having to hire too many employees, but still hiring talented people, you’ll be able to avoid a lot of costs.

Without having to hire too many employees, but still hiring talented people, you’ll be able to avoid a lot of costs involved with wages and salaries, while still having the ideal productivity output.

Unnecessary roles for brand-new start-ups

Administration – Administrative tasks can be done by almost anyone. If everyone is willing to put in their own effort to maintain their personal administration, you won’t need an administration person.

More than one business development manager (BDM) – When you are just starting out it is unlikely that you will have a huge number of clients, and so the need for multiple relationship managers will be small. Choose a BDM who has experience managing multiple clients and let them work with your initial clients.

An in-house chief financial officer (CFO) – It is uncommon for a CFO to be needed 24/7 and so having one in-house will be an unnecessary salary that you will have to pay. See below for a way to manage your finances virtually.

  1. Use a virtual CFO

An in-house CFO can demand a lot of money and may not be the best fit for your business.

Having a virtual CFO means that you have a choice of who manages your finances as well as having someone who is available when you need them. This will cut your expenses as you do not need to pay them a full-time salary and they are flexible with what types of packages they offer, working with different budgets.

Why you should hire a virtual CFO

  • They are flexible with their arrangements, allowing you to decide what kind of arrangement you have with them.
  • They are experienced in finance, allowing you to have the best person managing your cashflow.
  • They can apply specific strategies to your situation, increasing your chance of financial success.

Cutting costs is crucial for start-ups. Cutting corners with these three tips will help you to stay afloat during your first year in business.

David Boyar

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