Investing time and money into running your own start up company can be quite the uphill struggle for some people. It doesn’t always go to plan straight away, so it is good to know how to cut costs when running a start up business.
Having all aspects of the entire business running smoothly is the first step into getting the whole business venture to look promising. Not all start up companies will have a massive influx of investment or capital so that they can sustain heavy spending for a year or two, what some companies must start looking into is where they can cut costs down.
1. Real estate
As tempting as buying a massive glass windowed office and a marble reception is, it may not be wise to splash out on such luxuries straight away. Consider simply staying in your small home office or bedroom until the costs are calculated so you can decide if it is really worth it. If the business is along the lines of an e-commerce, operating at home for the start should be suitable and cheaper depending on the size of the business. The ability to decide whether some tangible items are essential at this stage is crucial in order to save money.
If you do decide to purchase an office, first consider the location. Then, ensure that the space you’re considering is reasonable for what you need. As previously mentioned, buying a big office sounds nice and helpful, but if you do not require that much space then do not rent out or purchase that much space. The costs will add up and will literally be wasted.
Some start up companies will make the mistake of hiring loads of people without actually realising the true costs of it all. A study shows that there are a lot of costs when it comes to hiring somebody. It’s not just money too – it will cost a lot of time in the extensive training.
Hiring people with expertise should be done carefully as there are some factors such as the level of skill you actually need vs what you are looking to hire. Falling into the trap of hiring an over qualified person for quite a simple job will set you back quite a lot in the long run.
If some tasks do not require an employee to be present for the entirety of a certain duration, looking into outsourcing contractors or part time staff that are only required when needed.
Alongside all the above, you should take time when looking to employ people to ensure that you actually find people that share the same ideas and vision as you for your company. It is so important at the early stages of a start up company that you have people onboard who want the same things as you and are willing to be really integrated into the business.
When purchasing items, try to take the time out to source multiple different suppliers and try to find at least 3 quotes from 3 separate suppliers, the aim of this is to try and source the cheapest cost for a certain amount of product. You can try get further reductions by forming business relations, deals or by simply bartering to get a cheaper price.
Another tip to help save cost would be to buy items that are for use in the near future, this means do not spend a load of money straight away on things that may be useful in a year. Although planning ahead is good thinking, it may end up costing way too much to buy items that are not going to be used soon.
In terms of machinery or equipment you may need, it may be cheaper to actually rent the equipment out rather than flat out buy a lease for it, this can substantially cut costs depending on how frequently you may need to use them.
To conclude, most expenses that are associated with start ups can be dramatically cut down by simply thinking through whether it is a necessity or a helpful extra. It is during this crucial stage all plans are calculated because many start ups tend to decline after being set up due to many factors such as not making enough profit, going bankrupt or simply because their ideas were not executed as well as they would of been.
This is a guest blog post by London Management Centre - a corporate training company based in London that offers corporate training courses at their London and Dubai offices on the topics of Leadership, management, human resources, interpersonal skills, media, PR, finance and many more subjects.