The Small Business Association (SBA) has lots of great information to share with entrepreneurs, and I found a recent article I’d like to share on being a lean start-up business. Writer Caron Beesley shares the following information:
The average cost of starting a business is $30,000, according to a 2009 study by the Kauffman Foundation. But whether your cash comes from savings or financing, watching how you spend your money is critical to the success of your venture. This means establishing boundaries and habits that ensure you spend your money wisely and operate as a lean start-up.
Here are six ways to rein in spending as you start and grow your business:
Work from Home, Co-Working Spaces, or Serviced Office Space
This one may sound obvious, but not all new businesses need to jump into a commercial office lease right away. Setting up a home office is a low-cost alternative (and can save you tax dollars). If you find you need a more social setting, consider a co-working space. These facilities are available in many cities and offer great opportunities for you to mingle with like-minded entrepreneurs. If you do need your own office space, consider renting a serviced office or executive suite. These premises are fully equipped and managed by a facility management firm. The rental agreements are often more flexible than commercial leases and give you the option of easily scaling up if you need to.
Barter
Bartering – exchanging goods and services directly with another party rather than paying for the service provided. Think about ways you could barter your services with another business whose services you need to reduce costs.
Don’t Hire Employees Until You Can Keep Them Busy
Offer interns work experience or hire independent contractors or even friends and family on an hourly or project basis to keep your costs low.
Be a Budget-Conscious Marketer
Invest in marketing and promotion thoughtfully and have a game plan. Think about low-cost tactics and don’t overdo it on the glossy marketing materials. If you and your staff have a clear elevator pitch and can engage and follow up enthusiastically with targeted prospects, there’s a good chance you’ll get a similar return on investment as the big guys with their glossy slicks and advertising budgets. To help you stay on track, create a plan for the year or quarter and calendar it out. This way you’re more likely to follow through, stay on-budget, and be less burdened by the need to come up with last minute marketing tactics. Don’t forget to monitor ROI to help you make informed decisions about what works and what doesn’t.
Safeguard Your Assets
If you think you are likely to incur debt during your start-up phase, consider forming a limited liability company (LLC) to protect your assets. Forming an LLC will ensure you are not personally liable for debts or judgments brought against your business as a result of a lawsuit.
Don’t Be Afraid to Negotiate
Many new business owners skip this important best practice in their early years, but practicing negotiation early will help you establish relationships that save you money now and over the long haul. Just be sure not to nickel-and-dime the fair offers that come your way, and work to build relationships with these vendors through repeat business and referrals.
If you follow these tips shared by Caron, you’ll be well on your way to a great start in your business without investing a lot of cash. Of course, we are always here as a resource as well. Feel free to contact our office at 310-534-5577 or [email protected].
Candy
Caron Beesley is a small business owner, writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start, grow, and succeed. Follow Caron on Twitter: @caronbeesley
