Starting a new business means you are about to join the booming network of SME. SMEs, or small and medium enterprise,s greatly contributes to society in numerous ways. According to a study conducted by the OECD, SMEs contribute up to 45% of employment and 33% of GDP in emerging economies.
Tips to Cut Business Costs
But small businesses, more than the international conglomerates they may hope to become, are very susceptible to financial problems early on. According to the American Bankruptcy Institute, more than 150 businesses file for commercial bankruptcy each day. One ultimate problem faced by these businesses is the lack of revenue, and rising operational costs.
Cutting expenses is a way to battle out the cost and change the tide of your cash flow. It largely depends on the kind of industry and market you are going to venture in, but there are general ways to boost your finances and cut your costs. Here are some cost-cutting methods to help you while launching your new business.
Avoid Renting Office Space for Now
One significant way to cut your costs and save money is by running your business from the comfort of your home. Office spaces are very expensive, especially in commercial-heavy estate areas. Just make sure your location is accessible for possible business partners, suppliers and customers, and that the room is spacious enough for your office needs.
Another way to avoid paying high rent is by looking for a shared office space. Co-working office space is an economical way to start operating without an office. They provide essentials like desks, internet, conference rooms, and even free coffee.
Buy Second Hand Equipment
Starting out a business means you are just about to get traction, and you do not really need expensive brand new office machines and equipment. Your money is best reserved for investments that will actually grow your business, so opt to buy used equipment. You can look for established businesses with the same equipment you need, and ask them if they are willing to sell it. It will be priced way lower than a brand-new piece, but still work and function as you needed. Ask advice from specialists to check the item for any possible defects that will cause the equipment to break relatively soon, and what can be easily mended with a quick fix.
Rent Out
If some items are impossible to be purchased, or machines are irreparable, then look for establishments that rent out assets. There are a number of business assets that can be rented, from commercial transportation fleets to office equipment and technology, and you can have them either for long or short-term use, with minimal fees, compare to buying brand new. It also saves you from acquiring depreciating assets.
Outsource Your Workforce or Contract Freelancers
Outsourcing is an inexpensive, efficient way to fill your staffing needs. There’s no need to worry about human resource related issues, or maintaining an accounting department for payroll concerns. You can outsource virtually any service or product you need.
Hiring full-time employees will only constrain your finances, and you don’t really not need too many full time employees just yet. If you need someone to develop an app for your business, you can just look for a freelance developer and pay on a project-basis.
Mentorship
When you venture out on a business, you are likely to have met and networked with people who have extensive experience. Look for a mentor among your list of established contacts, someone who can give you advice on key business issues. You would much rather have an intimate relationship with a guide who will have your best interests at heart, than pay a hefty fee for a business consultant.
Take Advantage of Virtual Tours
Free use and trial periods are going to be your best bet when you want to save money while deciding which piece of software will be the best fit for your business. Various software are helpful in tracking your finances, designing projects, targeting customers and other features that are beneficial to your business. Do not hesitate to take a free trial, because it can help you determine if the software tool can really help you.
Strict measures for saving up money do not end after establishing your business. Actually, it should be part of your business mantra. Cost-cutting is good, but never cut some slack.
Featured Image Source: Pixabay
