Launching a new business is exciting, but it doesn’t come with any guarantees. The good news is we know what attributes successful startups tend to have in common: they produce a product or service that meets a specific need, they thrive on the uncertainly of startup culture, and they don’t run out of cash.
We can’t give you a recipe for success, but here are 10 ways to lower your startup’s expenses and free up capital in 2016.
- Hire freelancers, temps, or college students.
Your startup may require a few full-time employees, but hiring freelancers, temps, or college students for specific tasks can considerably reduce payroll expenses. Upwork can help you connect with a vetted freelancer to handle almost any job, from data entry to lead generation, and Flinja.com is an excellent source for finding some of the nation’s top students for hire. If your workload ebbs and flows, consider hiring temporary workers to handle surges rather than paying full-time employees to sit idle during slow times.
- Consider a co-working space.
Sharing space with other businesses offers your startup a number of benefits. In addition to minimizing overhead costs like rent and utilities, co-working spaces usually include basic office equipment like desks, phones, and copiers — so you won’t have to purchase these items. Plus, operating in a co-working space can help you meet and network with people who have skills and experience that your startup may need. Before committing to a co-working space, work in it for a few days to ensure it’s a good fit. Look for a space that offers flexible lease terms, productive workstations, and a culture that complements your work style and startup goals.
- Transfer debt balance.
Interest on debt can add up quickly. Reduce your monthly interest charges by transferring your debt balance from high annual percentage rate (APR) credit cards to lower APR cards, or those with zero percent introductory APR. If you don’t want to transfer your debt, contact your credit card company and negotiate for a better APR.
- Use an online bank.
Leaving a brick-and-mortar bank for an online financial institution like Ally may reward you with better interest rates and lower fees. In fact, according to a MoneyRates.com study, online banks offer interest rates nearly six times higher than traditional banks. Online banks are also more than twice as likely to offer free checking and typically require much lower monthly balances to avoid maintenance fees. Several online banks even offer financial solutions tailored to small business needs.
- Bundle services.
Bundling business services like phone, cable, and Internet can save your startup a significant amount of money. Bundling also streamlines bill paying because all of your services come on one statement. Some service plans also allow you to lock in your rate, which keeps costs low for years to come and helps with budgeting.
- Inquire about discounts.
Ask your suppliers about the discounts they offer and what you need to do to receive them. Good credit, bulk purchases, or cash payments may qualify you for a lower price. If you think you are paying too much for your product or service, shop around for a more competitive price and ask your vendor to match it.
- Take advantage of the Cloud.
Cloud computing technologies can reduce your startup expenses, improve cash flow, and boost productivity. These days you’ll find Cloud-based tools to handle myriad tasks, such as invoice processing, customer relationship management, data security, and more.
- Lease, don’t buy.
Office equipment is a huge startup expense that eats away at your working capital. To avoid substantial upfront expenditures, consider leasing equipment rather than buying it. Doing so will not only help conserve cash, it may also save you money on equipment repairs and maintenance as those costs are often included in the lease agreement.
- Join an association.
Becoming part of an association can open up networking opportunities, establish your startup’s reputation, and save you money, too. Trade and business associations often partner with major companies to offer their members discounts on everything from insurance to car rentals and plane tickets to office supplies. You’ll pay an annual association membership fee, but the return on your investment could be considerable.
- Leverage data analytics.
Once reserved for major corporations, business intelligence tools are now available for organizations of every size. The right business intelligence tool can deliver data analytics that help you solve problems, identify new opportunities, and make smarter business decisions — all of which may save capital and increase earnings. Yurbi is a popular BI tool for startups because nearly anyone can use it (no IT expertise required), it’s affordable, and it easily scales to meet your needs as your startup grows.
No matter how much money your startup is bringing in, keeping costs to a minimum is critical for long-term success. Use these tips to reign in your startup’s expenses and maximize its profits. | Images via Shutterstock