How to control costs when starting your business

by Josh Biggs in Finance on 31st January 2022

It sounds so easy when you start jotting down your calculations on a beer mat. However, as the months pass, it soon becomes clear that this is anything but. In other words, starting a business is a costly affair – and one that can come to bite new entrepreneurs quicker than they may first have expected.

Bearing this in mind, today is all about how you can control some of your costs. This isn’t about cutting back on the essentials to your business and subsequently offering a bit-part service. Instead, it’s about taking a smart approach that trims the fat and gets you up and running in no time.

Use free or low-cost software

While it can be tempting to try and appear ‘corporate’ – this is an expensive look. Instead, there are several excellent pieces of software out there that won’t cost you a penny. In fact, many of them are even open-source, meaning you can use and adapt them to your own needs. Popular examples include:

  • WordPress for website design and development
  • Google Docs and Sheets for document creation and management
  • Skype for video and audio calls
  • GIMP and Inkscape for graphics and design work

You can opt for the expensive software later down the line, but for now, this is one area, for at least generic purposes, where you no longer need to invest in.

Only hire when you genuinely need to

As your business grows, you will undoubtedly need to bring in new staff members. However, this doesn’t mean you need to hire them from day one. In fact, you can do well by using freelancers and contractors until you reach a certain point. This saves you money in the short term, but it also gives you the chance to test out different people before making a permanent commitment.

Let’s not forget that there is more to hiring than the basic salary cost. You’ll also have to factor in pension contributions, general admin fees, national insurance, and even your own insurance costs as you welcome more people onto your team. Suffice to say, it’s a lot for a small company.

Ask yourself tough questions about your office space

This is a biggie. Not only do you need to factor in the cost of renting or buying office space, but you also need to consider the associated bills. This could be anything from heating and lighting to the price of broadband and telephone lines.

One way of mitigating these costs is to get yourself a co-working space. This is where you and many other businesses share a space and the associated bills. This makes things more affordable, but it can also be a great way of networking and building relationships with other entrepreneurs.

Particularly nowadays, you should also ask if you even need office space. We’re well and truly in the era of remote working – is your business a suitable candidate, and could this be a monumental method to cut costs?

Stick to a sensible budget for marketing and advertising

Marketing and advertising can be a huge expense for a new business that can quickly spiral out of control. However, if you set yourself a sensible budget, you can avoid this.

There are several ways to do this. Firstly, think about the most relevant channels to your target market and focus your efforts there. Secondly, make sure you track your spending to see what’s working and what’s not. After all, while Facebook Ads might be a goldmine for some new businesses, for others, the demographics mean that it won’t be effective at all. Understanding how your business reacts can be one of the best ways to cut costs and increase your profitability in the long term.

Categories: Finance