Unnecessary Costs of Starting a Business

There are plenty of costs involved when starting a business (hiring people, office rental, energy costs, etc.) with the average start-up cost coming in at around $30,000. On the flip-side, micro-businesses can be kick-started at approximately $3,000 or less.

While many initial costs are necessary, it’s fair to say that many are, in fact, a wasteful investment. And, given that cash flow and investment is all-important at the early startup stage, it makes sense for new businesses to avoid unnecessary expenses and eliminate them entirely.

At first glance some of these costs may appear to be minimal, when you add them all up, you could arrive at a significant amount of money. Which, of course, could be much better invested elsewhere, and provide you with a stronger foundation for success.

Here are four things to consider that can help you reduce any unnecessary costs of starting a business.

Hire flexible people

If you can avoid hiring people for as long as possible, it’s advisable.

Ultimately, as your business grows you’ll have to consider taking on people (employees) to give you a helping hand — just be strategic and selective with the personalities you hire. Your startup should be looking for very specific types of individuals in its early stages.

You need employees with multiple skill sets and the ability to help you out with various tasks in a variety of areas (maybe social media and sales generation).

Naturally as you begin to make more money, you can hire people for specific roles and define the role of existing employees. But in the early stages, flexible people are key.

Image Credit: Pexels

Don’t rent an office straight away

Room rental and rates will cost you money you can’t afford as a startup. It makes no sense to spend all that cash on an office when there are so many other options to consider.

For example, the go-to is working from a home office to save on rent altogether. Or you might visit The Hoxton Mix or a similar co-working space in your area to rent a cheap desk — or just use as a virtual address. Coffee franchises like Starbucks, have become quite popular as daily work areas for “solopreneurs”. I written a few articles for Virgin.com from there.

And there maybe other small businesses in your area who would be willing to rent out a single desk for you to work on your business, for a much lower market rate than you would find anywhere else.

Watch your energy usage

Wherever your business is, make sure that you are keeping on top of your energy bills. Even the simple act of turning off a light when you leave a room can help you save a significant sum of money over your first year.

And if you apply the same efficiency principles to every other electrical device, you will find those savings start to multiply by a huge amount.

Trade in your expensive analog phone line and use smartphone or laptop with services like Skype and Google Hangouts instead. With more people getting used to contacting businesses online, phone lines are an unnecessary initial cost.

It’s also important to factor in your energy usage into your quotation and invoice, particularly if you’re providing a service like web design, application development, graphic design, interior design, writing, editing, and just anything else that requires you using software to create a product. This will help you recoup some of the costs.

Image Credit: Pexels

Paying and being paid

A final point — never forget the importance of cash flow to your business. You always want to be cash flow positive. It will save you from significant debt over your first couple of years.

Try and collect any monies owed as quickly as possible, while holding on to your own payments for as long as possible. It’s imperative that you invoice your clients to get paid on-time.

Set-up lines of credit if necessary, as you will often find that the interest rates involved are much lower than you will find on a credit card.

But, all things considered, it’s always best to bootstrap your company by growing at a steady pace and reinvesting your earnings.

10 Ways for You to Approach a New Year of Business

The start of a new year can be both exciting and daunting (mostly the latter) as you again set out your goals for the next 365 days.

I prefer latching on to the excitement of a new beginning as it comes with energy, positivity and a renewed purpose. Look ahead to the unforeseen and relish the thought of the innumerable opportunities that await you and your business venture.

Appreciate each day that you are given and use every minute to cultivate new habits that will help to propel you forward. Read more.

Life is filled with unpredictable moments and even the best laid plans sometimes get thwarted. Do not be deterred by disappointment. It’s all a part of the journey and the upside is, each one of those bad moments comes with its own valuable lessons.

In my previous blog I shared entrepreneurial lessons I had deciphered from Virgin Founder Richard Branson’s autobiography, ‘Losing My Virginity’. Here are 10 more that I picked out to help both you and your business thrive in 2015 in no particular order:

  1. Your reputation is the most valuable asset you will ever acquire; protect it;
  2. In order of importance, your employees come before your customers;
  3. Know when your luck has run out and walk away with your life intact;
  4. You will be more passionate about a business venture when it involves fun;
  5. Part ways with business partners and save your friendship when your singular vision for the future become different;
  6. A parachute and a life jacket are good for longevity in business;
  7. Start small and scale as you see the opportunities;
  8. Bootstrap (fund) your own projects when you cannot get any loans or raise venture capital;
  9. Build a brand, not just a company;
  10. Growth is not achieved in a straight line, but a series of short advances and retreats.