Starting and running a small business almost inevitably means that money is going to be tight at some stage - often for a prolonged length of time - until the business can start generating a decent stream of revenue.
I'm a strong believer in growing earnings above every other strategy. Saving money doesn't put money on the table, so it is more important to earn faster than to save. But, without efficient use of your financial resources it may be that your startup never makes it to profitability, and that's where money saving tips can be useful.
The good news is that with massive advances in technology happening all the time, coupled with intense competition between service providers, entrepreneurs and small business owners have some fantastic ways to stretch a dollar.
Time vs. money
It's important to realize that some costs are unavoidable. So be prepared to spend a bit on tools and services that save time and help the business generate revenue.
Time is your greatest asset; not money.
Use what financial resources you have to move the startup forward without causing long delays that give other competitors time to capture market share and become established. For example, wasting a week learning how to build your own website from scratch is completely pointless when it's possible to create a modern, professional site for as little as $5 per month (we'll cover this in more depth later on).
Save money on office equipment
Computers, printers, desks, chairs, and all sorts of other gadgets and accessories are going to cost you. There's no way to avoid forking out for these items because they are basic essentials.
However, there is a lot of competition in the electronics and office furniture industries, and with great competition comes greats deals, sales, and prices. For example, a random browse on all-in-one printers on Amazon shows discounts of hundreds of dollars:
It's very likely that at any given time leading office supply stores like Staples, Amazon office, and Office Depot are offering discounts on different items. Checking back in a few days time might bring a whole new spectrum of savings on other products.
The disadvantage to this strategy is that you may not end up buying what you need immediately - having to wait a little while before it comes on special. On the plus side, because you are buying new items (at marked down prices), you'll still qualify for any guarantees and warranties that come with the new products. Not often the case buying second hand goods.
Save money on marketing & advertising
Marketing (and advertising) a startup is extremely high risk because of the high costs involved and no guarantees on return. Fortunately, with a little bit of creativity, it's possible to get some pretty effective buzz and visibility without breaking the bank.
1. Integrate marketing with everything
There should be almost no aspect of your business that doesn't tell people what you're about. If a customer makes a purchase, then include a pamphlet or brochure offering them new deals in the packaging.
Have a customer service query to handle? Do your best to resolve it as positively as possible and then, once the customer is happy, ask them to recommend your business on to their friends and family. In fact, customer service is one of the best marketing opportunities available to you.
2. Use free search ad budgets
Did you know that signing up to Bing or Google's consoles for webmasters often causes them to push an offer of free online advertising. Here's what I got offered from Bing:
$100 in free search advertising is great - remember that Google will also make a similar offer too for first time business webmasters. Admittedly, $100 might not last long if you're competing for high value keywords, but it will give your company name and brand exposure on thousands of low value queries.
3. Be newsworthy
Offering free use of your service, or a free product giveaway is a great way to generate interest and buzz without having to spend more than the cost of a single product or account. What's nice about this tactic is that combined with a well constructed press release, the promotion might end up getting free, local news coverage.
Do something for your community. Help out on a local project. Be a sponsor (often sponsoring smaller events costs very little). Your imagination is the limit.
Do something that is interesting and share it with local news, bloggers and influencers to get free coverage.
Save money on Web design
Everyone needs a website; regardless of whether it's a simple place-holder page, something to show off your resume and portfolio, an eCommerce store, or even a community portal. There's a lot to be said for learning Web design basics, but don't waste time with unnecessary custom design or learning how to code yourself.
1. Plan first; build second
90% of the wasteful expenditure I have encountered in the world of business websites came about because of a lack of research. Instead of taking time to understand their own requirements, companies simply approached Web designers and paid them huge amounts to create flashy custom sites that were soon out of date and even more expensive to maintain.
Think about what you need. Then research what is available - you'll be amazed at how cheap and efficient modern online site builders are. Only then are you ready to get started.
2. Use free trials
Almost all online website builders offer free trials (usually lasting about 2 weeks), or a free basic account (with paid upgrades). This means that you can at least get online for free initially, and only pay once the site is established.
3. Free website software can be expensive
Free CMS (Content Management System) software like WordPress and Drupal offer a fantastic free framework for creating powerful, professional and flexible websites. But, there are plenty of hidden costs here...
Chances are that your website will need a customized theme in order to have a unique look and feel that promotes the brand. Either this has to be purchased, or a Web designer has to be paid to customize a free theme.
Then, once the site has been completed it needs to be hosted somewhere. Decent Web hosting that comes with a bit of support has a habit of costing lots. By contrast, cheap Web hosting might save money but it can cost a lot more in terms of reliability - it's easy to lose business when your site spends most of its time offline.
Domain name purchases. SSL certificates. Support. Maintenance and upgrades. All of these have either explicit, once-off costs, costs that are built-in to other costs, or are recurring. Be careful not to underestimate these.
Save money on software & technology
We pay for expensive software that often has completely free alternatives, and many of these free alternatives are as good, if not better, than the commercial version. New technologies crop up every day that offer huge advantages in efficiency and productivity at drastically reduced costs. It's up to you to find them.
1. Use open source alternatives
Don't feel like buying Microsoft Office? Why not take a look at the freely available Open office. In fact, there are lists of free software for you to explore and use without incurring any costs at all.
2. Move to the cloud
Traditional software packages come with a host of built in expenses that online, cloud based software solutions don't. For example, buying a software DVD from the store means that there were manufacturing costs, packaging costs, and transport costs built into getting that item to the shop (let alone the retail markup).
A cloud based company has hardware and network costs, sure, but these are significantly lower and getting lower all the time. They also have no middleman. They are much more flexible too - often charging you only for the functionality and data you use - instead of putting everything onto a DVD.
Online, cloud based software is a more efficient and cheaper way to provide software services.
Cloud software is also updated behind the scenes on a continuous basis, unlike purchased software that is either subject to inconvenient updates, or may simply become redundant over time. It's not only cheaper it's better value for money.
3. Embrace new technology
One of the best examples of how new technology (in recent times) has helped produce massive increases in efficiency, ease-of-use, and effectiveness along with huge decreases in cost comes from the communications industry.
Previously, companies needing complex phone based communications would have to install a hardware based PBX system. This was both extremely expensive, highly-technical and generally prohibitive to any business without serious finances. Now you can do a better job, in twenty minutes, using an online cloud based virtual PBX system for a fraction of the cost and without requiring any technical expertise.
That's just one example. New technologies are springing up everywhere to replace old, manual, hardware based systems with slick, online apps at a fraction of the cost. Make it a point to keep tabs on what new offerings are coming online.
Save money on staff & administration
There are two fundamental ways to save money on human resources:
- Automate more
- Pay less
Fortunately, there are some very easy ways to achieve both.
1. Use online freelancers
There are a lot of online marketplaces, like Freelancer and Fiverr, that help connect people who need work done with people who have the skills and knowledge to do it. What's good about these platforms is that they generate a lot of competition - meaning that you can get great work done at a fraction of the price it would cost locally.
The downside is that until there are established relationships with reliable freelancers, it may be that the quality of the work done is not what you expect.
2. Automate with online productivity tools
There are vast communities of developers working to integrate apps and services into online platforms.
A good example is the eCommerce industry, where it is now possible to integrate an online store with a host of other cloud based productivity tools in order to manage everything from tax and accounting to stock control and order fulfilment.
Automated productivity means less manual work, with corresponding savings on labour costs.
Bonus money saving tips
Plenty of our readers have fantastic tips and ideas that they have used to save money in their own businesses. Here's a selection of some of the best ideas we've seen (be sure to check back regularly as we'll keep this updated as new ones come in):
- Don't pay cash for business expenses: Keep a paper trail of business related costs so that you can write these off as business expenses and reduce your tax bill.
- Research associations and rewards programs: While it may cost a bit upfront, finding the right rewards program or business association can end up saving on a wide range of business expenses, like insurance and travel.
- Don't overpay on postage: Ensure you always pay precisely the right amount in postage stamps in order to avoid overspending or having products returned without being delivered - useful for eCommerce stores shipping items via USPS.
Have you bootstrapped a startup? How did you get through the tough times when money was short? Share your experiences and ideas in the comments.