10 Ways to Reduce Costs While Starting a Business

15 January, 2019

15 mins read

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It’s 2:00 am. The best idea for a product or service has just woken you from your dreams. In the morning, you still think it’s a great idea so you get to work starting a business—your business. Okay, maybe it didn’t happen exactly like this but the point is you’re about to offer the world something special.

There’s so much to think about; financial backing, production, acquiring equipment, finding customers. Everything seems to cost money. When you’re starting a business, there’s not exactly piles and piles of it waiting to spend on luxuries.

Before you start cutting costs, take a look through our list. There are plenty of ways to prioritise your budget, snip unnecessary costs and where you should invest your dollars to bring in more customers before you even officially open.

1. Prioritise Essential Startup Costs—Even the Not-So-Obvious Ones

Make a list of every single thing your products or services cannot exist without. Now, make a second list of ways you are going to attract customers. Huh? Yes, marketing is considered an essential service. How else are you going to have people to buy your product or service? Anything else can wait.

Some of the things you’ll need straight off the bat when you’re starting a business:

  • Essential equipment and resources (vehicles, machinery, mailing resources, produce, phones, computers etc.).
  • Any insurances, accounts, etc.
  • A website (find out why a free website will cost you more money in the end).
  • Some sort of promotion, such as Google Ads, search engine optimisation or social media campaigns.
  • A platform for people to leave reviews (here’s a free one).
  • Online business directory listings (here’s 10 for free!).
  • Staff, if needed.

2. Keep Track of Your Return on Investment (ROI)

Wow! You’ve made 5,000 sales this week. But why is your bank account looking so sad? There’s a chance your return on investment isn’t adding up. It could mean your advertising isn’t effective, you’re spending more on producing than you receive from the customer or your expenses are simply over budget.

The first thing you need to do is find out exactly how much it costs to produce your product or provide your service. Every time you list a new product or service, find this out.

Next, create a realistic budget. Every month, write down your expected budget, and then compare it to how much you really spent. Adapt your next month’s budget, creating another expectation and reality list.

The third thing on your list is check your advertising. If you’re spending $100 on boosted social media posts, 10,000 people are seeing them but you’re only receiving 10 sales, something isn’t right. If you’re not sure where you’re going wrong, see our next point.

And finally, see what you can implement from this list into your plan for cutting cost while you’re starting your business.

3. Consider Outsourcing

Spending money to make money—really? Really! You most likely started your business because you’re an expert in your field or you know you have something different to offer—just like digital marketing experts, website developers, bookkeepers and other service providers. Their job is to get you the bang for your buck you need.

If you don’t have time to do something, are spending too much time doing it or simply don’t have the time, consider outsourcing. With your monthly ROI analysis and budget, you can always see if it’s working or not. The upfront costs are probably making your cringe, but digital marketing services like Localsearch will offer monthly payment plans on some options. It never hurts to ask.

4. Be Diligent With Checking Every Invoice, Contract & Letter

Accidents happen—but it doesn’t mean you have to let them slide. Then there’s always the sneaky hidden fees for things like cancellations or changes. Every time you receive an invoice, email, letter or notice, sign a contract or agree to any terms of conditions, ready every single word. You’ll pick up on any accidents or conditions that may have blown your budget.

This will also come in handy for point 6.

Person with bills

5. Have a Very Good Bookkeeper & Accountant on Your Side

Who has time for payroll, BAS, GST and all the other complicated sides of business? Well, you kind of need to make time—or hire someone to do it for you.

Not only will hiring a professional bookkeeper and accountant keep you on the right side of the law, it will save you time and, potentially, a chunk of money. You can find help near you on www.localsearch.com.au.

6. Get Negotiating & Bartering

Remember how we said checking contracts and invoices will come in handy for this point? We weren’t kidding. A lot of people will have things covered in their super or bank accounts that they’re paying insurance for. Once you know where you stand, change your policies or call to negotiate a better price.

You should also be calling your suppliers and seeing if they will offer a discount for bulk orders or regular business. In some cases, you may be able to do a trade if there’s something you have that they need and they have something you require. For example, you may be able to have a social media influencer promote your products in exchange for them getting them for free—just watch the PR package unboxing videos on YouTube.

7. Go Digital Immediately

Have you ever seen the price of copy paper? Why print everything (such as flyers, invoices, etc.) when you can email or SMS from the computer already on your desk or phone in your hand? Recycling your booking planner and opting for a digital calendar and doing away with other paper isn’t only cheaper, it’s doing your part for the environment too.

Person using calendar on smartphone

And then there’s your digital marketing. Before you even open, you can have people pre-ordering your products, lining up at your doors or bookings in your digital calendar. There are plenty of companies who have nailed their marketing before opening day and have sold out or have had plenty of back orders waiting to be filled.

8. Employ All-in-One Software & Providers

The price of individual software and services can add up fast. The solution is using all-in-one service providers or systems. These are just some of the ways you can cut costs with all-in-one providers:

  • A customer relationship manager (CRM) combined with booking, review and digital marketing tool software.
  • Agencies who can provide all your digital marketing outsourcing, such as social media, website development, search engine optimisation and search engine marketing.
  • Grouping insurance, banking and cover plans.

9. Ensure You Have a Backup Plan

Imagine if one of your critical suppliers went out of business tomorrow, there was a power outage for days on end, or there was another crisis. You’ll either have to make a rash decision (possibly resulting in paying more than you need to) or having to close your doors for a time—unless you’re prepared.

There’s plenty of things you should create a business crisis plan for but these are some of the critical aspects you should consider:

  • A backup generator if you rely on power.
  • Cloud storage in case of technology malfunctions.
  • A list of suppliers who you can trust in time of need.
  • A list of contacts for when you’re in a pickle, such as a trusted mechanic, electrician, plumber, etc.
  • In case of a crisis, have an agreement in place of a business you can refer customers to and receive a referral rate.
  • Have a booking form on your website so you can still receive new appointments for future dates if you’re unavailable for a period of time.

10. Think Ahead

10a. Production Costs

You know how Christmas decorations always hit bargain-basement prices on Boxing Day? It’s a great time to stock-up on what you need for the next year—including any seasonal production materials. If you know your costs to produce a product or provide a service around holidays, such as Christmas and Easter, stock up ahead of time or when prices are lower.

Rolls of fabric for production

10b. Digital Marketing

Around special occasions, you’ll want to market your business as much as possible. However, with so much on your plate starting up a business, you probably won’t think of it until a day or two before a sale, Boxing Day or high-sale opportunity. So, again, have a backup plan by thinking ahead. Start building your marketing communication list as early as possible. There are some customer relationship managers) CRMs that will do this for you when people use your business, so you get a two-for-one.

You’ll also want to start amping up your social media activities well before you need big attention. Find out when, why and how in our article, How to Use Social Media Marketing to Boost Your Boxing Day Sales.

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