Money is a scarce resource in the startup world, and many small business entrepreneurs are always looking for ways to cut cost. This usually proves to be a difficult task, as everything seems to be necessary at the moment.
…and you could be spending less on those that are very necessary. Below are 10 things your business can do without, or you could be spending much less on.
1. Subscription-Based Services
Your business needs project management, automation and several other software that will make work a lot easier for your company. These can cost quite a lot, especially if they are based on periodical payment, which means an extra expense in your budget every month.
You don’t need to spend money on a lot of software, as there are many tools that offer good quality service for absolutely free. Whenever you need software, use the free versions first and only pay when the features you need are not available.
2. Office Space
Renting office space is one of the constant business expenditures, taking up 4.6 percent of most startup spending, and that is not including utilities. When you choose one that is too expensive, you are setting yourself up for high expenses every month.
First, consider if you need a working space or if your employees could work remotely. You could also get a smaller office space, and give all the employees whose job doesn’t require them to come to the office an opportunity to work from home.
3. Office Equipment
Furniture, stationery and electronics can cost quite a lot if you buy expensive stuff. The average startup spends three percent of its budget on business equipment alone.
This does not mean you have to buy cheap tools because that can affect your operations and make the working space difficult to be in.
Try visiting secondhand stores for quality products at a discounted price. Also, have rules for stationery. A lot of paper gets wasted in printing; most employees have sticky notes, notebooks and pens they never use, just letting them pile up in a drawer.
4. Branding Goodies
Branding is very important to a new business, but it rarely has any value. They are a wasted expense that doesn’t have any proven results, yet they eat into your budget and sales as the printing of logos on the merchandise can be quite expensive.
Seeing your company grow and bringing on board more employees is an exciting and motivating thing, but it is a very costly expense if you are not ready for it. More employees mean increased overhead costs, more salary expenses, medical coverage, pensions and other such expenses.
According to the National Association of Independent Businesses, employee wages are the biggest expenditure of small businesses, with 19.4 percent of all the company’s money spent on it.
Keep your company modest until you are able to afford more staff without it being an inconvenience. You can automate tasks to free up some time to do more important, cash-generating tasks.
6. Networking Group Memberships
Many new entrepreneurs would want to join as many groups as possible to widen their network connections.
Even if the membership is just $20 per month, when you join five, it’s $100 every month, which is a significant amount of money for a small business where every penny counts.
7. Ill-Thought Marketing Efforts
Marketing can never be disputed as one of the most integral parts of any business. But any marketing effort that cannot be measured is a waste of both time and money.
This is because you won’t have a way of finding out what works in order to focus your efforts on it and discard others. If you have marketing techniques that cannot be measured, you run the risk of using marketing campaigns that don’t work and get basic results, while you could be getting more from targeted, focused marketing.
8. Unnecessary Events or Travel
Company parties, lunches and trips are nice and could boost staff morale, but they can be wasteful especially for a startup. Many startup entrepreneurs like to indulge in such, perhaps as to show that the company is doing well.
Research shows that small businesses spend 37 percent more on plane tickets than large businesses. This extravagant spending can only lead to cash flow problems if not controlled well. Minimize the traveling time for staff or allow your people to collaborate virtually. You can also have your staff join similar events and send them off at one time.
9. Expansive Website
The truth about websites is: people want them simple, easy to navigate and full of great content. You don’t need one that costs several thousands of dollars just yet, but many small businesses are still spending 52 percent of their web marketing budget on web design and maintenance.
You can find professional website designers with amazing work online. Sites like UpWork have a lot of freelance designers who will charge a fraction of what big companies would cost to design your website.
10. Buying Followers
Many small businesses will try to buy followers in an attempt to get a community of potential customers. This is usually a wasteful endeavor as the audience you buy is likely made of robot traffic with fake profiles that are never going to convert. Thus, you’ll never make a profit from them.
When you start your business, you should run it with a frugal and minimalist mindset. Analyze every expense critically, and if there is a way of cutting costs while getting what you need at a good price, then take it. However, be careful not to compromise quality while trying to cut cost, as this will cost you a lot more in the long run.