Cost saving for new business owners. According to statistics, more than 1,000,000 businesses sprout up every month just in the United States and Europe alone. While they all share the same vision and aim, many of them fail to make it past the 5th year. They may be doing everything according to the book; yet they fall victim to the tough economical times we have been going through since the past few years among others. In this article, we will explore some tips and guidelines on how to avoid being one of those businesses.
Have a Rainy Day Fund
This is perhaps the most redundant business advice of all, yet only a few actually follow it. Even if you have a detailed financial plan for the next five years, unexpected expenses are bound to hit you when budget gets tight, which is why you need to be prepared and have a safety net to prevent your business from failing. This safety net comes in the form of reserve funds, which you can use instead of stocking up numerous loans from the bank. The latter also adds to the costs in the form of interest, so it’s best to have your own reserve funds.
Spend Wisely, Not Miserly
Now when a business owner is asked to spend wisely, often times they mistake it for being miserly, which means a lower percentage of funds allocated to operations pertaining to their business. Needless to say, this is a recipe for disaster. While it is important to manage and plan out finances, new business owners also need to understand that their business needs to uphold a good public image, which means they need to actually spend on brand building, marketing etc.
However, don’t spend more money than it is necessary on items that aren’t important. An office chair that can be bought for $50 isn’t worth spending over $200 for, and vice versa. Remember, your business is still in its startup phase; plan out your budget accordingly.
Merge Your Departments
This may seem a bit complicated, but you can save a lot of money applying the merging strategy. In your initial phases, you will be faced with the tough task of forming various departments and assigning tasks to them. You can, on the other hand, assign two of the same tasks to the same department in order to save up on costs, essentially merging them.
For example; suppose you are running a business and decide to form an online marketing department which manages the Facebook/Twitter page of your enterprise along with replying to various customer queries. Why should you need a dedicated customer service department when you can simply reply to customer queries online through the page?
Yes though customer service is a crucial component in the formation of a new business remember that you are currently in the initial phases, and the need for a dedicated customer service department shouldn’t come until later on.
Use All Available Discounts
If you ask around from banks, stationery stores and other business support services you will find out that they have lots of discounts and incentives for new businesses especially in the first year of operation. Ensure you are aware of these benefits and maximise them to save funds which can be deployed to other key areas of your business.