Money can be tight for a start-up, which in most cases is financed from savings or the sale of an asset, like land.
A new business takes time to become profitable, so you want to stretch your money to last as long as possible.
If you want to be sure that your business will be around for decades to come, you need to run it efficiently and avoid any unnecessary wastage, even when things are looking up.
Here are six ways to cut back on the major expenses that tend to sink small businesses.
1. Office space
Technology has made it possible to operate a business with minimal or no office space.
You can make massive savings by making your goods or services available on online platforms as opposed to a physical location, or by operating largely from home.
If you must have a physical location, consider starting out at a co-working space. You can hire a work desk at about Sh1,000 a day or Sh16,000 a month, and with it, get access to a receptionist, boardroom, wi-fi and printing services.
You can also get together with entrepreneurs offering complementary services, and partition a space you can all afford. The advantage of doing this over working in isolation is that you get to network with people who can provide your business with services, such as public relations, accounting or IT support, at an affordable rate.
To run your business efficiently, you’ll need access to software for bookkeeping, word processing and presenting your pitches. However, you don’t have to pay for expensive licences or servers when you can settle for cloud vendors, such as Google, or open source versions. You can find a list of what’s available on websites like Sourceforge.
When looking for employees, start with those who are capable but have little experience. Or consider hiring freelancers.
Salaries and benefits for full-time employees can be quite costly, so in as much as you can, don’t rush for the big names until you’re sure your business can afford them.
You’ll find that those with little work experience but solid academic credentials will be happy enough to have their foot through the door, and with some training and supervision, will meet your expectations.
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At some point in your business, you might find that you need someone to manage small tasks, but you can’t afford to hire an employee. You can microcontract these sorts of jobs through online work sites, such as Upwork, Fiverr or BrighterMonday.
Every business needs to be in the face of its target market if it is to attract clients. That’s why businesses spend millions of shillings on advertising.
However, this kind of budget is normally out of the reach of small businesses. Be creative to reach your target market on a shoestring budget.
One way a small business grows is through referrals, so go the extra mile in providing services. Make it standard practice to over deliver on your promises, and consider tucking flyers or tiny thank-you cards into the packaging you use for your products.
Also, make use of social media platforms like Facebook, YouTube and Instagram. Join communities with potential clients and be helpful. Keep abreast with what’s happening in your industry to stand out as an expert.
Choose a niche that is relevant for your business and start a blog.
Write articles and participate in online discussions.
Do your research on different media houses and find out what programmes your business could be a part of. Contact them and pitch your ideas. Don’t give the market a chance to forget about your business.
Running a lean start-up is in, and it’s a smart way to go about building a business that outlasts you. Don’t lock up your cash in products you’re not likely to use any time soon.
Avoid making rash purchases just to keep up with appearances with your industry peers. Use what you have until you’re sure you have exhausted it. Don’t pay extra for a brand name when you can use generic options that are just as good.