By: Cheryl Hajjar, February, 2015
You are reading this article because you have either decided to start a new business in 2015 or you are looking for ways to save money in your existing business. Either way you are reading the right column. Many of you know that my business, The Indigo Pixies is not new to the startup world. In fact, it has been my experience, and a little bit of trial and error, of the best ways to use funds and the not so best ways to use funds. Everyone will always tell you that the way to make money is to spend money. Yes and no. With nearly 50% of new businesses failing in the first two years, its is hardly because of lack of commitment and drive, but more so of not knowing how to cut costs and have a solid financial plan. The best way to achieve a healthy bank account is to learn early on in the game that low overhead is the way to big profits.
Here are some suggestions on starting lean and growing strong:
1. The Lawyering Up Lowdown: In the beginning, we knew that going to a lawyer to incorporate and set up our business was the first step. Lawyers are a necessity to some degree. Paying for the pie in the sky law firms in Boston, not so much. Fees ranging from $300 to $500 plus an hour can get costly and probably not in your budget, at least in the beginning. Until you have created the next Apple or Uber, you can wait to hire them. In the mean time, find a local attorney to do the work. They many not have the fancy waiting rooms that look like you just stepped out of Andy Warhol’s loft, or the free bottle of water, but trust me; they are fully capable of doing the same work for a lesser fee. Legal Zoom is also another way to do it yourself if you are feeling ambitious. There are plenty of boilerplate documents and instructions that can get you through those first stages of creation of your entity. Have confidence in yourself.
2. Barter, Barter, Barter: Bartering your professional service is something that has been done for centuries and is still being done today. If you have a service or specialty that you provide that may serve as useful, offer it up in exchange for something that your business needs. Other business owners will usually be happy to negotiate some sort of terms with you. You never know until you ask.
3. Rent Communal Space: With new startups being created everyday, these are all the rage lately. Instead of renting out an office space, why not rent a space in one of these locations? Most incubators charge anywhere from $100- $300 a month depending on their location and with a skeleton crew in the initial stages of your business, it just makes sense to cut costs on rent.
4. Do It Yourself: As the CEO of the Indigo Pixies, I have learned how to do most every single function of my business. From finances to creation of product, sourcing and marketing, I’m the go to girl. Why is it so important to do this? In the beginning, it teaches you every aspect of running a business. It’s a phenomenal education. You learn by trial and error on all facets, which things you implemented worked and which didn’t so when you do have the budgets and you start to hire people, you won’t spend unnecessary amounts of funding on things like marketing budgets and sales strategies. Learning how to do everything yourself will not only save you money in the beginning, but it will allow you to have a great understanding of all of the logistics work within your infrastructure.
5. Coupon Everything: If you think couponing is only what your grandmother does, think again. As an extreme couponer myself, I save in between 50-100% on everything I buy, including supplies for our business. Paying full price for anything these days with all of our Internet options is just not being savvy and quite wasteful. You can always find a deal whether it is for personal use or your business. Stores like Staples, CVS, Rite Aid and BJ’s all have cash back reward systems where if you buy a certain item, they will give you cash back for that item. If you couple that with a sale on that item and a coupon, you have struck gold. Check out the rewards programs at your favorite stores and learn how you can save big bucks on items you buy everyday.
6. Buy Used Equipment: If you are a brick and mortar business, you are probably going to need equipment. Why buy new when you can find older items for less? Craig’s List, Ebay and Amazon are great discount sites to look for “gently used” office equipment, shelving, or even pizza ovens. You are also saving the environment by using refurbished items. Leave the fancy swivel chairs for when the big bucks are rolling in.
7. Squeezed For Time? Hire An Intern: Its not rocket science to know that when you own your own business, it’s a full time job plus a full time job. There are millions of college students and recent graduates who are willing to work for little money or even free to get the experience. You are able to delegate some duties that you either may not have time to get to at the end of the day, or quite simply do not want to do. For example, having a marketing intern who has a pulse on what the latest trends are in social media could be a great way to get some of your marketing needs done for free.
8. Outsourcing: In a perfect world, everything could be made and done in America, but the reality is, especially for startups, it’s just not a realistic statement. Outsourcing things like web design, SEO and even data entry can greatly reduce your overhead. Sites like ODesk, Elance and Supreme Outsourcing will work for your company around the globe. If you can reduce some of these costs, you are able to hire more full time people here. Your company is founded in America; so don’t fret too much about it.
9. Credit Cards with Rewards: When choosing a business credit card, take advantage of a card that gives you reward points back for purchases. Chase Ink has a great sign on bonus: earn 50,000 in bonus points when you spend $5,000 on business supplies. That’s $625 towards flights! Not bad at all. Others are Citi and American Express who offer in between 1-5% on various purchases plus different airfare and travel deals.
10. Become A Social Media Expert: Make it your New Years Resolution to become great at social media. If you don’t have one already, start a business Facebook, Instagram, Pinterest and Twitter page. The best businesses monitor their social media accounts frequently. Social media is free and it keeps you in control of creating your own content. Creating contests, posting questions and initiating discussions are all great ways to keep your audience engaged in your product or services. The days of spending thousands on a billboard sign and direct mail campaigns to drive people to buy your products are so over.
From credit card rewards to hiring interns, there are plenty of ways to save money in the bootstrapping days of your business. Creating a lean financial forecast is a mindset, not a complicated road map.