Reducing the Start-Up Costs of Your New Business
The biggest impediment for most entrepreneurs in their quest to start a new business is the lack of money to fund start-up costs. Fortunately, those costs are constantly falling, which means that you can start a new business with a lot less risk. Although there are many conceivable cost-cutting measures, some of the most popular ways to save money on start-up costs include the following:
Reduce Your Overhead
If you are looking to start your business for as little cash as possible, you need to find ways to reduce your overhead expenses. Your eventual risk of failure or possible bankruptcy will increase as you spend more on your initial outlays. Cash gives a company options, so a key goal for any small business is to stay nimble by treating cash as a precious commodity that should only be spent on the most essential items. For one example, you could work from home for the first few months, which will save thousands of dollars in rental costs.
Find Cheap Alternatives
For almost any product or service that a small business needs to operate, there are cheap alternatives to the expensive, full-featured solutions that are advertised to entrepreneurs. For instance, you could buy Microsoft Office for hundreds of dollars, or you could download OpenOffice – the open-source alternative to Microsoft Office – for free over the Internet. Instead of going through the costly process of getting a merchant account, try using Square, which will allow you to process credit cards without any upfront costs at all.
This is not a solution that will work for everyone; if your business exposes you to significant legal risks, you will need a corporate legal structure to protect your personal assets. However, for many small businesses, starting as a sole proprietorship could be a viable option. The benefit of a sole proprietorship is that there are typically no set-up costs; in fact, in most states, you don't need to do anything at all to start a sole proprietorship. At a minimum, it is certainly cheaper than filling out all of the paperwork to form a corporation.
Utilize Information Technology
The computer and Internet revolutions have been a godsend for anyone who wants to run their own business. Today, young entrepreneurs can command the power of a multinational corporation from a single computer, and they can do it with minimal costs. With modern technology at your fingertips, you can communicate with coworkers on Skype, manage projects on Basecamp and build a powerful website on distant servers.
Outsource Extraneous Work
If you want to succeed in the modern business world, your goal should be to focus solely on your core business functions; everything else that needs to be done should be outsourced to other companies. Not only does this save you significant amounts of time, but it allows you to rely on the expertise of other companies for those extraneous jobs that would cost you too much to do yourself. As the specialization of the world economy continues, almost anything can be outsourced, including human relations, accounting and legal services.
Running a small business is a difficult undertaking that will require hard work, dedication and commitment. Of course, even with all of those attributes, the chances of success are against you. However, by following the above tips, you can ensure that you are doing everything possible to obtain eventual business successs.