In 2016 The Telegraph reported that 50% of Start-ups fail in the first 5 years. There are a number of reasons why businesses fail but, despite the facts, people continue to try and defy the odds with over 660,000 Start-ups registered in 2016. The biggest reason businesses fail is down to its financials. It is imperative that business owners allocate its cash wisely and keep operating costs low. Overbuying office equipment supplies or even hiring employees for your new business can diminish your cash quickly.
Assuming you have some cash to start your new business you’ll need to write a list of expenses and assets. Expenses are the recurring costs you’ll face to keep your business operating and assets are a one-off cost that you need to start your business. We’ve put together this guide to help you maximise your revenue and keep your business costs low.
The most expensive cost that most Start-ups face is their physical location. Hiring an office in a sought-after location that is barely big enough for just 2 employees can set you back £1,500 per month. There is light at the end of the tunnel, you can run your business from home. Over 14 million businesses operate from home and a report from Citrix predicts that by 2020 nearly a third of people will no longer work from a traditional office and the UK will hold one of the lowest desk-to-worker ratios with just six desks for every 10 workers.
If you’re worried about your business location or even using your home address for professional matters, then consider registering with a Virtual Office provider. London is one of the most sought-after business locations in the world but unfortunately for many, the luxury London locations are in high demand and unaffordable. That is where high-end Virtual Office providers like us (I know, I know) come into play. We offer business address packages from as little as £240 per year, Less than 20% of one month’s office rent! We also offer a parcel forwarding service, phone answering service, meeting room hire and much more.
Instead of hiring a full-time social media manager, consider contracting a freelancer. Your new business doesn’t require the same amount of attention as an existing business. You’ll want to consider 20 hours a month instead of 40 hours per week to cut the costs by contracting your employee’s.
Avoid asking the bank for a loan, and avoid tying up your personal assets with your new venture. Accepting a loan from a private lender or a bank usually comes at a heavy cost with big risks. Think of some cool ideas for local fundraisers to try and raise the money you need. You could also create a Crowdfunding page and share with your online community or ask friends and family for an interest-free loan.
You know the saying. If you don’t ask, you don’t get! Don’t be shy when it comes to negotiating service fees, even those big corporate companies haggle for the best prices. Negotiating is somewhat a skill, you’ll need to set objectives and decide which parts are negotiable so if you’re worried or nervous you can take an online course or attend a workshop.
If you insist on having a physical location for your business one way to cut costs could be your phone system. Instead of paying a provider a monthly fee why not use your mobile number or perhaps ge30-day day rolling contract from as little as £10 per month. Should your business expand and require a phone line you should be able to afford it.
Need or Want?
Starting your own business is exciting, we get it, you want to go all out just as you would if you were having a baby because this business is your baby! We all want the big trending names but often there are much more affordable and competitive products on the market. Instead of getting that £1000 laptop opt for the £500 one from a competitor whose reviews are just as good.
As with the laptop above, think about what is a necessity to get your business running. If you’re running your business from home do you really need a new desk? If you’re running your business from an office what about a recycled desk? No one will know and it will do the exact same thing at a fraction of the cost.
Chances are you can never find a pen when you need one but if your one-man band or a small team of 3 you won’t need 100 biros. Think smart and start small. Maybe you’ve always dreamed of wearing your own logo or having your team wear it? In the early days having a professional uniform may not be necessary so these costs can be saved for a later date unless your customer faced.
We’re not saying don’t have a website but we are saying keep the costs low. WordPress has hundreds of free themes which are all easy and adaptable. If you’re not familiar with WordPress take the time to learn how to use it and build your sit yourself. Alternatively, post a job ad on sites such as PeoplePerHour and receive proposals from capable and competitive designers.
Where possible use free versions of software on the internet. I’m not saying you should use free cybersecurity software, some things are a must but programS like Google Drive have a free word processor, spreadsheet or presentation service. MailChimp offer’s free email templates, Hootsuite has a free version of social media management, Skype is free, Freedcamp project management tool is free, DropBox basic account offers 2GB of image, video or document storage. The list goes on. Only invest in software that is absolutely necessary, remember you can always upgrade accounts when the time comes.