Launching and building a business can be an expensive venture. You will probably need at least some form of small business loan to get things off the ground. Even if you don’t, you could find yourself spending thousands of dollars or racking up costly credit card debt getting ready to open your doors. 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 pull yourself out of the hole.
Maximizing Your Existing Resources
When starting a new small business, it’s important to distinguish between what you need and what you want. Buying a brand-new computer and new office furniture might look nice, but it isn’t worth the cost when your existing computer and desk work just fine. Buying a bunch of swag with your business name or logo might be a way of getting your name out in the public eye, but consider whether you will see any return on that investment.
Operating on a tight budget means doing a cost/benefit analysis on any expenditure. If you have trouble figuring out how you might earn your money back, it should be given low priority. Since you only make money when you’re open for business, 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 any resources you may 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 as little as possible every month and save until it hurts. The same idea also works for your business. Just because you start growing your revenue and begin generating a profit doesn’t mean it’s time to start loosening the budgetary constraints. The long-term success rate of small businesses is pretty dismal, so it makes sense to continue conserving cash and building a safety cushion for as long as possible in case you ever hit hard times.
If you find your business producing a profit, think about strategies for paying down outstanding debt. Outstanding credit card balances can cost 15 to 20% or more annually in interest. These are costs that get you absolutely nothing; 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 necessarily mean you shouldn’t be making some investment into growing your business. Even on a tight budget, spending money isn’t a bad idea if you believe you can get a return on your investment.
Registering for a training seminar or industry conference can be examples of good expenses. If you believe that you can turn the cost of training on new industry software or sales techniques into significantly higher sales through increased customer acquisition, that would be a worthwhile investment in your business. Attending a conference where you can make dozens of valuable contacts and talk to a number of potential new customers would also be a wise use of resources. This might also be the time to try testing out a small local advertisement or marketing message to see 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:
Use social media to your advantage. If you’re an accountant, create a Facebook or Twitter page and 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 to see if you can get a lower price purchasing them all together.
Run a promotion where you offer a discount on your business services. Companies use these loss leader strategies to obtain new customers all the time. Many customers that try a product or service for free turn into regular clients.
Always shop around for the lowest price. If you need to upgrade your technology, get bids from several vendors. Let them know that you’re talking with other companies to get the best price.