3 Simple Ways To Save Money As Your Startup Grows
Startups have a shocking success rate: 90% fail and 70% scale up too soon to sustain mid to long-term success.
There are many reasons startups fail, but one of the most important is money – it costs a lot to run your own business and your financial commitments can quickly spiral.
While it’s always appealing to believe that saving money means going for the cheapest option, this isn’t always the case.
I’ve explained how getting free goods, paying for specialists, and seeking sensible borrowing are three ways that will save your startup money and help it to grow.
Recommended reading: A Start-up’s Guide to Scaling Your Business in Less Than 1 Year
Have a Freecycle office set up
Whether you start at home or in a rented business space, you need an office to kickstart and grow your startup.
But the problem with this is that it costs money to equip and furnish an office – money you may not have. Luckily, it’s money you don’t need to spend if you opt for a Freecycle setup.
Freecycle is a nonprofit organization designed to let people gift away their unwanted things, allowing others (like yourself) to pick up perfectly good items for absolutely nothing – it’s also an eco-friendly way of operating a business.
You can post adverts for the items you need, or select from existing listings to get the equipment you need to aid the growth of your startup.
One thing you need to keep in mind with using a Freecycle setup is that you won’t be able to get everything you need. But have no fear, you can use upcycle, recycle, charity, or thrift stores to get cheap, second-hand goods to kit out your office.
Outsource where it makes sense to
Surely I’m not suggesting that one of the best ways to save money is to spend it? I certainly am and the reason for this is that it makes business sense to do so.
Let me explain.
As a startup getting off the ground, time and resources are slim. This means that you have two competing issues fighting it out: the need to focus on your strengths and the reality that you need to do a lot of tasks yourself.
This is where outsourcing comes in.
There’s no getting away from the fact that you have to have certain elements to your business that aren’t in your skillset. For example, HR, IT, finance. Examples of companies offering these services for relatively small fees include:
- Xero – Accounting and payroll software
- Tech Support Expert – IT support team
- WebHR – HR management software
By outsourcing these (and any other relevant) elements of your startup out to specialist organizations you’ll actually be saving yourself money. Why? Well, because it means you can focus more of your time and energy on the tasks that only you can do.
Use the credit to give you access to cash
Some expenditure is unavoidable – for example, if your startup employs any staff then they need to be paid.
However, not all of your essential spending needs to be paid out of the company pocket right away. Using credit sensibly gives your startup immediate access to the cash it needs to grow by staggering the repayments over tomorrow and beyond.
The key to using credit is that it needs to be the right borrowing, low-interest lending from reliable creditors. Some of the obvious examples include:
These can give you thousands in cash to buy the things you need. The level of borrowing you’re able to get depends on where you’re based – as an example, the UK government offers a startup loan of up to £25,000.
A little niche, but a lifesaver if your company needs trade equipment. Trade accounts let you get tools, and so on on a buy-now-pay-later basis.
I recommend you find an online trade company near you that has a good reputation and check if it offers trade accounts.
TradeUK – a network for tradesmen that’s ideal if your startup has a construction element – is an example of how your business can use trade accounts to buy-now-pay-later.
If delivery is a feature of your startup – if you’re an eCommerce company that sells goods – then fuel cards are a great way of keeping costs low. This is because you can, like a trade account, by-now-pay-later for your fuel.
There are many options, such as Shell fuel cards, or ones that let you buy cheap petrol and diesel at supermarkets. You can find examples of these on iCompario, a specialist site that allows you to enter your startup’s requirements and get the best option for your business.
Keeping costs low at the early stage of your business is crucial to the future of your startup.
But, as I’ve explained, saving money isn’t about simply taking the lowest cost or commitment option – it’s about making sensible investments when you need to and taking free options when appropriate.
So get free/second-hand goods, outsource, and access the right credit to help your startup save money as it grows.
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