It’s getting more and more affordable to start a small business. Here’s how.
Startup costs are easily the most intimidating hurdle for prospective small-business owners; but planning ahead and taking advantage of all resources can make the zero-profit “desert” you have to cross a whole lot shorter. Cutting unnecessary costs can also free up money that you need to spend promoting and advertising your product, which can make a huge difference for your long-term success. Here are a few ideas to get you started.
1. Don’t skimp on marketing
Promoting and advertising your product is the engine that will pull your startup into profitability, so every dollar you save should fund an aggressive, professional marketing campaign. If you’re operating without a storefront, your website is your storefront; and that makes quality web development essential to the success of your business.
In addition to paid, professional marketing, take advantage of every free marketing opportunity you can find. If your business is service-oriented, encourage friends to give you positive reviews on Google, Yahoo, Yelp, and any other online review source you can find. Wage a deliberate, intense social-media campaign—encourage your employees to get involved and post about your service on Facebook and Twitter regularly.
2. Select office space carefully
Office space, furniture, and utility bills are a huge fixed cost for a fledgling small business. While you’re in the startup phase, everyone should be a telecommuter. Even when you decide that you can afford it, question whether it will really increase the profitability and efficiency of your business to have all your employees under the same roof.
When it’s time to find office space, never take the first offer from your prospective landlord; the price of commercial real estate is much more flexible than the rent on an apartment, especially in a tough economy. If you’re moving into a space that has been vacant for some time, you can probably convince the owner to defer your rent while you furnish the place, or even help you fit the space for your business.
3. Go open-source whenever you can help it
Software can also be a huge drain on your startup budget, and there are open-source options for some of the most common (and expensive) software that small businesses need. MS Office is a great example of the extravagant cost of simple software—their Professional edition can be $400 per device, but OpenOffice and Google Docs are free; and depending on your industry, they can probably do everything you need. (You can always shell out the extra money later, if it doesn’t work out.)
4. Cut hardware costs
Once you set up office space for your startup, don’t buy individual PCs for each employee—instead, look into renting server space and using thin client technology. You may have noticed this in libraries or schools—most now run dozens of virtual machines, each with its own interface, from a single server. It’s much cheaper, more secure, and more environmentally-friendly than the alternative.
If you do a lot of face-to-face transactions, don’t bother with an expensive merchant account to take credit cards—instead, get a smartphone card reader from Square, Intuit, or PayPal—the fees are comparable, and you don’t have to deal with monthly flat rates when you’re not using the service very heavily.
4. Use contractors instead of full-time employees
Any job that can be split into verifiable tasks should be done by contractors. Salaried employees are a big gamble for a startup, and can make your job as a leader much more difficult. If the majority of your work is done on a contract basis, people get paid for performance and work harder without too much supervision.
Hiring contractors also makes your business easier to scale up with growth—it’s much easier to give a contractor more to do (or bring them on salary) than it is to wring more work from salaried employees. Especially in the startup phase, flexibility is everything.
Aimee Watts is a staff writer for Going Cellular. She has ten years of experience with startups and small business, and loves spreading tips and advice for fellow entrepreneurs. She loves gadgets, new ideas, and skiing with her two favorite people: her husband and teenage son. They live in Evergreen, Colorado.