5 Ways Startups Can Save Setup Costs
If you just started up your small business, you’ve probably heard that terrifying statistics claiming that 8 out of 10 startups fail in the first 18 months but the truth is: those numbers are a myth. However, it’s also true that, depending on the industry, almost 50 percent of startups don’t make it to four years and you probably can guess what the main reason is for that. That’s right—it’s because of money so finding any way to save a bit is precious to new entrepreneurs. If you don’t want your business to fall under that scary statistics, here’s how you can save money on setup costs and improve your odds of turning into a success story.
Rethink your needs
You just started a company and you imagined yourself sitting in a fancy chair in modern office downtown? Sounds like a pretty picture but you should ask yourself first whether you really need an office. We all know most startups start in founders’ garages but plenty of them stay in there while they’re making a breakthrough. The reason? Avoiding necessary costs. This will, of course, depend on your industry so if you’re an online based startup you probably won’t need large office space while, for example, equipment rental services will need a warehouse but will it really need an office space?
Go second hand and couponing
There’s no shame in purchasing used furniture or reusing what you already have, especially if it will delay bankruptcy. Used usually means cheap but not necessarily old or damaged so make sure you know your options and choose the best for your startup. Chairs, tables, filing cabinets—all of that can be found online or in flea markets so get ready for a scavenger hunt. As for the office supplies, you can cut costs down by making use of coupons and vouchers. Look for sales, discounts, and buy in bulks to make it as cost efficient as possible.
Hire on contract
The first rule of startup club is not “do not talk about the startup club” but “do not make long-term commitments.” This applies to your employees as well. Hiring full-time professionals is a fantastic thing but it might be a bad business move, at least in the beginning, while your startup is still shaky. On the other hand, that doesn’t mean you should treat your employees like slaves but making use of contract hires is a smart thing to do. Think of it as a trial period for both your employees and yourself. If things get serious, you’ll already have capable workers to hire full-time.
Rent, don’t buy
When we said “no long-term commitments” it means that you should apply that to your office, furniture, and equipment as well. Of course, you won’t buy an office space as soon as you start but did you know you can also rent everything else? Do the math and see if it’s better to rent or to buy used furniture—it will mostly depend on your needs. As for the equipment, know that whatever your business needs—you can find a good rental for it. This is especially useful for heavy and expensive machinery but don’t worry—you can rent a scissor lift, a pallet jack, a bulldozer, or anything else you might need.
Look for tax deductions
As a general rule, every government should support small business and thus offer tax deductions to every small entrepreneur. This can mean a lot for your budget, especially in the early start so make sure you ask around. If you’re not feeling capable of dealing with that kind of paperwork, it might be a good idea to hire an experienced accountant, preferably someone who worked with startups previously, to guide you through the process. Also, try to find out what taxes your neighbor businesses are paying and use that to negotiate with the authorities.
Now, get back to your business plan, do the calculations, and see for yourself—you can save a lot of money on setup costs by following the advice we provided above and thus have more money to invest in what really counts—good personnel, marketing, and, of course—product development.