Launching and building a business requires hard work and a significant financial investment. You probably need some form of small business loan to get things off the ground. Even if you don’t, you could find yourself shelling out thousands of dollars or racking up costly credit card debt to get your business ready for opening day. The purpose of every business is to generate a profit, so operating on a shoestring budget might be one of the best strategies to help you get off to a great start and minimize your startup debt.
Maximizing Your Existing Resources
When you’re starting a new small business, it’s important to distinguish between what you need and what you want. While purchasing a brand-new computer and new office furniture might seem appealing, it isn’t worth the expense when your existing computer and desk work just fine. Buying a bunch of swag with your business name or logo is one way of getting your name out in the public eye, but you have to consider the expected return on that investment.
When you’re operating on a tight budget, it’s important to do a cost/benefit analysis before making any expenditure. If you can’t figure out how you might earn your money back on a particular item or investment, it’s a good idea to rank it as a low priority. Since your business only generates income when it’s open, identify the minimum amount of resources you need to get up and running. This should include a good online software package and invoicing system so you can bill clients quickly. Once your business is operational, you can identify resources you still need to function more efficiently.
Operate on a Tight Budget as Long as You Can
Some of the most successful retirement investors are those who spend the least amount possible each month and save until it hurts. Small business building requires a certain level of frugality. Just because you start growing your revenue and begin generating a profit doesn’t mean it’s time to start loosening the budgetary constraints. What if you fall on hard times in the future or have a desire to expand your business? For these reasons, it makes sense to continue conserving cash and building a safety cushion for as long as possible.
If you find your business generating a profit, consider strategies for paying down outstanding debt. Outstanding credit card balances can cost you 15 to 20% or more annually in interest. These are costs that produce absolutely nothing tangible, so it’s in your best interest to get these debts off your books as soon as possible.
Invest Intelligently in Your Business
Every dollar you spend is a dollar you don’t get to keep, but that doesn’t mean you should be afraid to make some investments into the growth of your business. Even if you’re on a tight budget, it’s not a bad idea to spend money as long as you believe you can get a return on your investment.
Examples of good expenses might include registering for a training seminar or industry conference. If you think you can turn the cost of training on new industry software or sales techniques into significantly higher sales through increased customer acquisition, it’s worthwhile to invest the money into your business. Attending a conference where you can make dozens of valuable contacts and talk to a number of potential new customers is also a wise use of resources. This might also be the time to test out a small local advertisement or marketing message to find out what kind of response you get.
Other Budget-Friendly Ideas
Being an effective bootstrapper means identifying ways to utilize existing resources to maximize business impact. Other simple ideas that could save you money or grow your business at almost no cost include:
- Take advantage of social media. If you’re an accountant, create a Facebook page or Twitter profile, then upload weekly videos where you provide free tax tips and advice. People love getting things for free, and those people could turn into paying clients down the road.
- Try getting a bulk discount on bundled business services. If you need solutions for bookkeeping, invoicing, payroll, and expensing, work with one vendor tin an attempt to get a lower price purchasing them all together.
- Run a promotion offering a discount on your business services. Companies use these loss leader strategies to obtain new customers all the time. Many customers who try a product or service for free turn into regular clients.
- Shop around for the lowest price. If you need to upgrade your technology, collect bids from several vendors. Make them aware that you’re talking with other companies to get the most competitive price.
Starting a small business is an exciting time, and if you keep your spending in check, you can see your business grow and flourish. Always know exactly where your business stands. Make smarter business decisions now.