While it may be false to claim that half of all businesses fail during the first year of operation, it’s certainly true that plenty of them don’t make it past that 12-month milestone. There are many reasons why things can go wrong, but money difficulty is one of the biggest: grand ideas plus sloppy budgeting can easily consign a startup to an early fate. That’s why it is crucial to save money in a new business.
If you want your business to survive beyond its first year, you need to find some ways to consistently save money. Luckily, I have four vital tips to help you cut down on your operational expenses. Let’s get to them.
Save money in a new business: 4 tips
Go green to save money — and the planet
Extinction Rebellion has put climate change to the top of the agenda – protesters have hugely disrupted the transport routines of everyday workers, causing businesses to lose money. But going green is actually an excellent way for your company to save money – both in its first year of business and far beyond.
There are two obvious ways that you can go green (each of which is covered later): going paperless, and using recycling. But these aren’t the only ways your business can use a green agenda to save money. You can also do the following:
- Replace commuting with remote working.
- Use energy-saving light bulbs.
- Stop buying milk for the office.
- Darken your computer screens.
These are all simple changes, but each one has the potential (if adopted very broadly) to make a big difference to the health of the environment and your company’s finances.
Equip your office with second-hand equipment
Whether you’re running a one-person operation or a larger-scale small business, you inevitably need an office – even if it’s just a corner of a room in your parents’ house. Whatever the size of your office, though, you’ll need equipment for it, and a cost-effective way of getting it is to go second-hand.
While it’s great to have pristine new equipment for your business, you’re not going to have the budget in your first year to spend heavily on things like chairs and desks. Why not use a marketplace like eBay instead? It’s great for picking up basic equipment. Another option is to attend swap meets — you won’t have as many options, but if you find some viable pieces of equipment (particularly larger items), you may have an easier time collecting them than you would having similar items shipped to you.
Use free software for the essentials
It’s impossible to start a company without using software, even if you’re an artisan seeking to avoid technology as much as possible. There are a few software essentials that almost every new business must have, but they don’t need to be costly: there’s actually a wide range of free software tools that you can draw from. Here are some I recommend:
- Marketing: Mailchimp – free email marketing for up to 2,000 contacts.
- Payroll: Wave – free payroll processing with no hidden fees.
- HR: OrangeHRM – comprehensive cloud HR software that’s totally free.
- Tracking: TMetric – tracks the hours you work to allow you to spot any wastage.
- Website: WordPress – the finest open-source website builder on the planet.
All of these essentials can be swapped out for more powerful paid alternatives down the line if necessary, so there’s no compelling reason not to use them now.
Always track your cash flow
Contrary to what you might believe, saving money isn’t simply about cutting costs – it’s also about avoiding them altogether. The average business collects a lot of regular bills (such as rent or website hosting) and failing to pay them on time can hit you with penalty payments. Tightly managing your cash flow will help you avoid late fees, saving you money.
Cash flow management may sound like a no-brainer for anyone switched-on enough to start their own business, but it’s remarkably common for companies to overlook it, often through concentrating solely on profitability. Don’t take that risk. If you make good use of free cash flow management tools, you can remove the danger: it isn’t a very sexy tip, but it could be the one that saves your business the most money in its first year.
Your first year in business could be the hardest you’ll ever face. You need to get used to running things, put processes in place, create your workplace, build your structure, and achieve so much more. If you implement these four tips, you’ll find your all-important first year considerably less stressful, and (perhaps most significantly) more cost-effective.
Find more money-saving tips in our Business section.