Do's and Don'ts for Managing Startup Capital

by Rachel Hartman on February 15, 2012
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You’re full of ideas, energy, and enthusiasm for starting a company — but do you have adequate funds? Many entrepreneurs come up short in the money department.

Wade Benz found himself in this situation in 2006, when he launched USimprints.com, an online provider of promotional products. At the time, Benz had very limited startup capital, so he sought ways to make the most of what was available to him. Now, six years later, his company serves more than 20,000 customers worldwide. Its client list includes Fortune 500 businesses and educational, nonprofit, and religious organizations.

The Intuit Small Business Blog recently asked Benz to share his thoughts about what to do — and not to do — when it comes to startup capital. Here are the tips he shared with us.

Do buy used. Benz bought most of the furnishings and electronics his company needed from a local used office furniture and equipment store. “Our computers were either open-box purchases at a local computer shop or refurbished models that were less than six months old,” he says.

Don’t underestimate the unexpected. It costs more than you expect to do just about everything when starting a business, from building a website to renovating your storefront, Benz notes. Look at the funds you have and build in a cushion for those unexpected – but often necessary – costs.

Do barter for goods and services. Even today, six years after launching, Benz trades his company’s goods for the services he needs. Just make sure that you’re getting a fair value in return when exchanging goods and services, he advises.

Don’t overestimate your sales. There are hundreds of variables that play into the success of a business, Benz says. When it comes to sales, stay safe by playing on the conservative side.

Do learn about search engine optimization. In the beginning, USimprints.com grew through organic SEO. “If you stay consistent, you’ll see a steady and free increase of visitors and potential customers to your website,” Benz says. To learn how to build links, key quality content, and increase visibility on search engines, he recommends visiting SEOmoz.org.

Don’t abuse your credit cards. Credit cards can be an easy fix to short-term capital problems, but beware of the high interest rates attached to them. If you can pay them off in a timely manner, consider using cards to build points that can be used for business expenses and purchases, Benz says.

Do hire interns. If you live near a college or other vocational school, tap into a potential source for free or low-cost help. Many students take on internships before graduation and are willing to work for free (in exchange for course credit) or for minimum wage in order to gain experience.

Don’t let your payroll get too big. While payroll is often an organization’s largest expense, there are still ways you can keep costs down. If you’re not an expert in a particular area of your business, consider outsourcing as an alternative to hiring another employee. At USimprints.com, Benz has outsourced financial, technology, and manufacturing services.

Rachel Hartman is a writer who frequently covers topics related to small businesses. Her work has appeared in The Costco Connection, Wells Fargo Conversations, Pizza Today, Bankrate.com, InsuranceQuotes.com, CreditCardGuide.com, and many other outlets.

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