Main Street Launch is excited to feature a guest post from Amanda Cameron. Amanda Cameron is a content writer for Patriot Software, LLC, a provider of online accounting and payroll software for small business. At Patriot, she writes about payroll, small business accounting, the recruiting process, and other small business topics.
If you’ve recently started a business, you know how important it is to keep expenses low until you have a solid customer base. You need to reduce business costs during your startup phase without sacrificing the quality of your company’s offerings.
Ways to reduce business costs
Keeping costs low during the first years of business is essential for long-term success. Use these seven tips to reduce business costs during your startup phase.
1. Outsource tasks
You might have considered hiring an employee to help you get your business idea off the ground. But, payroll is a large expense. If you only need temporary help on certain startup tasks, a permanent employee might not be the best option.
To get short-term or specialized jobs completed, consider working with freelancers and independent contractors. These workers are not employees of your business. You are not responsible for paying employer taxes on their wages.
Contractors complete specific tasks and do not work for you once the job is done. When freelancers complete duties for you, you can focus on growing your business. You might outsource tasks such as managing your business blog or filing taxes.
Make sure the worker is considered an independent contractor in the eyes of the government. Misclassifying a worker as an independent contractor vs. employee can lead to having to pay penalties, fees, and back wages.
2. Market with social media
Advertising and marketing costs can add up fast. Luckily, small businesses don’t need to pour tons of money into promotions. A popular low-cost marketing strategy is to target a more niche, and often local, market, so you don’t have to run national campaigns to get the word out.
One way to market your business is on social media. You can promote sales, events, and product launches. Or, you might purchase affordable ads to place on social channels.
Create accounts for your business on multiple social platforms. Your social media accounts should be brand-focused and professional. Post information relevant to your industry and business. Be sure to engage with your followers and answer users when they reach out.
3. Go paperless
Sometimes, your biggest costs are hiding in plain sight. Paper can be a huge burden on your wallet. These days, hard copy paperwork is often an unnecessary cost. In the age of the World Wide Web, you can cut down spending by moving information online.
There are several ways you can convert to a paperless office. You can use online banking to reduce paper statements and trips to the bank. This allows you to access your banking from your phone, move money to different accounts, pay vendors, and review statements.
You can also use simple software solutions to streamline tasks. Software reduces the time you spend on administrative duties, like accounting and payroll.
4. Use small business discounts
Take advantage of professional savings to reduce business costs during your startup phase. Your suppliers might offer discounts on bulk orders. If you use a certain product regularly, find out if a bulk order is an option.
You might also be eligible for discounts by joining a small business group. For example, your local chamber of commerce probably offers discounts on business-related items. Keep in mind that these groups might charge membership fees to participate.
5. Power down
Chances are, your business isn’t open all day and night. Energy costs can add up when you leave appliances running 24/7. You can reduce business costs by turning off machines and devices when your business is closed. And, you might want to upgrade old equipment that wastes energy.
If you have employees, you might need to remind them to shut down at the end of the workday. Take some time to adjust and talk to your team about why you made the change. Before you leave each day, make sure all computers, lights, and equipment are turned off.
6. Review your vendor terms
You rely on vendors for the products and services that keep your company going. It can be difficult for startups to negotiate vendor terms. You’re new and have not yet formed relationships with your suppliers.
To get the best deal, shop around and compare prices from multiple vendors. See which vendors are willing to be flexible with payment terms. You can try to negotiate terms with the vendor.
Forming relationships with your vendors early on is important. Even if you don’t get the best terms now, building connections with vendors can save you money in the long run. As you gain trust over time, vendors tend to be more lenient and offer better payment terms.
7. Buy used equipment
Everyone likes getting shiny, new gear. But as a new entrepreneur, buying new equipment might be a waste of money. Consider purchasing used equipment when you’re starting out. Make sure you check out the new equipment before purchasing it to be sure it works properly and won’t break soon after you buy it.
In the first phases of building your business, you might not know exactly what you need. You could end up pouring money into equipment you don’t use. Wait until you have a feel for what’s necessary before investing in top-of-the-line tools.
To purchase equipment, you might need to take out a small business loan. Review your options for startup funding, as there are many different kinds of loans available. Some lenders focus on helping small companies. For example, Main Street Launch offers capital services to help small businesses succeed.