Wherever those Business costs can be reduced and controlled will depend somewhat on how established your business is. Here we focus on areas for controlling and cutting costs as you start out on your business journey.
Getting off the ground and controlling the cost of funding
While the purpose of gaining funding is to inject money into your business it can also provide an ongoing cost to your business, depending on which type of funding you use.
The cost of borrowing (credit) seems to become more expensive almost every time you look. Often getting loans to start a business can be too expensive for startups to consider. Instead, you may find loans from friends and family could be a cheaper alternative. They may even offer much better terms and sometimes interest-free, saving you a considerable sum. It’s worth also bearing in mind the politics that come into play here too. Especially, if your business doesn’t progress in line with your plan or if they become too heavily involved in the day to day decisions of your business.
Other means of finding funding include sourcing a suitable crowdfunding opportunity. Again, look carefully at what will be expected in return for the funding and how much the crowdfunding platform will charge. And Government funding may also be a good source of capital.
Cutting the cost of finding premises
If you’re starting your business from the comfort of your own home there can be tax relief that you can benefit from. This includes the business costs directly related to your work, such as your business phone calls, electricity and gas directly relating to the area of your home in which you work. Remember that you may also need to pay increased insurance for your home business. You may need to gain permission from your local council and your insurer and you may need to pay business rates.
Once your business has been set up and as it starts to grow you may find that working from home is no longer possible. At this point you’ll need to look for commercial premises.
In finding your premises, while you do need to bear in mind your plans and visions for growth, you should be realistic about current requirements. Choose somewhere that is ample but not too stretching. You could also consider shared space to start with, hiring a desk in another office or retail outlet or in a serviced environment.
And remember to factor in all the business costs that you may have to pay and to negotiate.
The tools of your trade and finding cost reductions
While it may be tempting to buy all of the fixtures, fittings, and equipment you need from new it’s important to think carefully about what you really need. Try to only buy what is essential and to consider second hand. You may also consider hiring equipment to start with, enabling you to weigh up its usefulness and effectiveness. Sharing with other companies, or borrowing from them, may also be an option.
Never opt for poorer quality items to save money – the saying ‘buy cheap, buy twice’ was coined for a reason! This is especially important where they may impact on the quality of the product or service you are providing too.
Employing staff and the costs involved
As your business grows you’ll probably need to consider taking on help. While there are cost implications of directly employing staff you may be able to control business costs by using freelancers. Consider taking on work experience candidates (interns) or by choosing to take on an apprentice.
Reducing the cost of marketing
When creating your marketing strategy your budget will be a key consideration when you’re choosing the channels you wish to use. For example, if you’re planning a direct mail campaign then emailing can certainly be more cost-effective than printed and postal mail.
You may also wish to consider social media as platforms for promoting your business. While setting up a website presence is certainly important, you may be able to work from a simple holding page during the beginning phases of your business, redirecting prospects and customers to your Facebook page and other social media presences.
Word of mouth can be a very cost-effective, and free way of promoting your business. Great service and simply asking people to advocate your business can go a long way.
If you do need to pay for some marketing activities always try to negotiate. But remember, if a media representative comes to you with an offer that sounds too good to be true, always evaluate whether you really need it and whether it’s targeted at the right people. Cheap isn’t always cost-effective.
Whichever avenues you choose always make your campaigns measurable and make sure to evaluate them. Use your learnings to make them more cost-effective the next time around.
Reducing your business costs versus cost-effectiveness
As with all areas of setting up and running your company, your business is unique. The areas in which you can cut business costs will differ from those of other businesses. All business costs are controllable and ensuring that you account for every penny will help you on your road to success. Starting with your cost-effective company formation, finding a suitable accountant, through to branding options and more. Remember, keep an eye on your business outgoings makes sure sense.