TOP 5 WAYS TO CUT COST WHEN STARTING A BUSINESS

Image Credit: Getty Images

Today, we live in a world where business thrives and entrepreneurship is the way out. Many people are looking up to or have already started their little scale business which they hope in some years to come will become a mega corporation that will offer employment to thousand of people and make all their dreams come true. Now while that is a great plan, it doesn't always work out as easy as it seems. From experience many times when we start a business, we make an estimate of the whole running but due to lack of technical know how about how to run that particular business, we might find ourselves under budget or spending a lot of money which we did not account for and the competition in the market don't go soft on start up infact they will want to do everything in their power to see that they keep you from succeeding, so you don't put them out of business in years to come. If you want to succeed in any business and survive the harsh competition, you will need to cut down as much cost as possible without reducing the quality of your service. Think about it this way, all the products that we use at our homes, in restaurants and even in the offices are all a result of someone who sacrificed their savings and decided to risk it in a business. It is good to know that they didn’t start at the same point they are today. When you hear their stories, you will be amazed how small they started out at the beginning but look at them now! They are what many people refer to as a real success story.

Owning a business, however small it is, makes you feel proud. No one should be ashamed of humble beginnings since that's what it takes to get you where you want to go. When you have a small capital; do not wait, start something right away and make sure by all means that you give your best to your customers while cutting down on as many cost as possible. This article will give you 5 point that will help you cut down your cost as a start up and be on your way to success...

1. Start your operations from your house

This is one of the easiest ways you can start saving a lot of money that comes into your business. With this, you have to carry out the feasibility of your business within the area from where you want to operate first.

Rather than waiting to raise cash to rent office space that will later be used as the business premises, it is advisable to run your business from your home or reach out to a friend or anyone who has a free room and use it to run your business. Paying rent every month is far way cheaper than renting out commercial office space.

With a home office or rental space, you have to make sure that it is very spacious to accommodate you as well as the goods you are dealing in for security purposes. The room should be easily accessible and more so located near or by the roadside. This enhances accessibility for your customers as well as the suppliers who supply you with goods. It is also good to talk to your landlord, if you are renting, about your situation before you even start paying the rent. Explain what you are doing so that he gives you a grace period of about one month before you start paying the rent. This will give you time to approximate all your monthly income as well as make you calculate the best distribution of the costs.

2. Don't Hire Full-Time Employees

As said earlier, it is about conserving cash in the business and nothing else. As a small business owner, employing somebody on a permanent basis could create a lot of financial constraints in your business. How? A permanent employee may need insurance, pension and allowances even which at the start you won’t be able to afford. So what do you need to do to avoid these costs? Do not hire anyone on a permanent basis. If your computer system has developed an issue, you do not have to hire a computer tech for that. You can just call in a qualified IT guru to solve the problem within a few hours and get paid and that is it. 

Why would you employ an accountant when your business cash flow is just a small figure? It would be illogical for someone to be seated here all day doing nothing and getting paid in the current world. When it comes to accounting purposes, you only need to call in a certain qualified accountant at a period of let’s say three months to balance the books of accounts and tell you how well your business is doing financially. This is the ultimate way a small business can reduce costs and enhance their growth.

3. Negotiate With Vendors on Discounts 

For you to survive in the current economy, one needs to have very good communication skills. Without speaking your mind, someone else will speak their mind on your behalf. Therefore, it is good for you to be very loyal to the vendors in terms of making payments. When this is done, now it is your turn to somehow dictate the terms of the business that you want. You have a say on how the business between you and the vendor shall be done. First of all, negotiate for discounts on the goods that the vendors supply to you. This will be a good way to lower the costs of running your business and sell them at a higher price enabling you to boosts the profits for your business. 

Another way of dealing with vendors is by taking the goods on credit terms and make the payments after all the goods are sold. This will be good since you will be selling the products on behalf of the vendors and enjoying the profits without even investing. 

4. Buy Goods in Bulk

When you buy goods in bulk, vendors will give you very large discounts. This will enable you to make a lot of profits after the sales. This means that when you are dealing in goods that do not expire buy them in bulk and save on costs so as to increase the profit margins of the business in the near future. 

5. Buy Used Equipment 

One mistake many young entrepreneurs have been doing is starting a business with brand new equipment or machines. This is not the way to go. It is expensive for you considering the fact that you do not have a lot of money to play around with. The only cash you have is the capital for starting a business so the money that you have needs to be conserved. New equipment is very costly and anyone especially struggling business owners should never go for them.

Look for established companies in the line of your business and ask them about the availability of the equipment that you need.

So there you have, the point above will help you cut down on cost as much as you possibly can, at the same time not compromising the quality of the product or service you are offering to people. Don't forget that the world we live today is run by mega corporations, ultra-successful entrepreneurs and internet gurus who invested all their time, money and efforts in entrepreneurship and as such if you are not smart enough when starting out this guys will make your start up a living hell. So adhere to this point and you will be on your way. Wish you all the success you line on business has to offer.

Please don't forget to subscribe, comment and share us with your friends. Thank you