How to Keep Costs Low in a New Company


Running a new business can be hugely stressful. Positive cash flow is critical, as poor cash flow is the primary reason why 90% of businesses fail in the first five years of trading. Since you won’t have many clients in the early days, the best way to keep your cash flow positive is to reduce your expenditure. Here are some easy ways to keep your operating costs as low as possible. 

Cheap Startup Finance 

Your business is doomed from the start if all your income is being spent servicing your startup loans. Try to keep your borrowing costs as low as possible. Use savings if possible, or approach family and friends for a loan. If you do need to take out a business loan, shop around for a competitive lender with the most attractive interest rates and borrowing terms. The best business financing options are usually found online, so do your research before you take out a loan. 

Cheap Office Space 

There is a reason why startups often begin trading from the owner’s home – yes, you guessed it – because it is cheaper! After all, business behemoths like Microsoft, Dell, and Apple started in garages!

Offices space can be expensive, especially if you covet a prestigious address. The minute you sign a lease on an office, retail, or storage space, you have committed to paying a considerable sum of money. The best way to keep costs low is to run the business from home for as long as possible. When you are ready to make the move into an office unit, look for a cheaper rental in a less expensive part of town. You can always upgrade when the business starts making serious money. 

Don’t Hire Too Many Staff 

Many new business owners wear multiple hats in the early days, to keep their costs as low as possible. There is a limit to how many jobs you can do, so don’t overstretch yourself, but conversely, don’t be in a huge rush to hire new staff. The cost of employing staff can be a big burden for small businesses. You are often better off sticking to freelancers to plug the gaps. That way, you can hire people for short-term projects only when you need them, which is a lot cheaper. 

Negotiate With Suppliers 

Small businesses have less room to maneuver in price negotiations than big businesses, but this doesn’t mean you should roll over and accept whatever prices your suppliers offer. Never accept the advertised price for the goods you need. Try to negotiate a discount for bulk purchases or early invoice settlement. Once you become a repeat customer and your orders increase, you can renegotiate new prices. 

Cut Office Expenses 

Keep your operating costs in the office as low as possible by not wasting consumables and energy. Switch off electrical equipment when not in use, use energy efficient lighting, don’t print documents unnecessarily, and encourage staff to work from home where possible. You could even purchase used office equipment.

Always monitor your expenditure closely, so you can slash unnecessary spending like pricey office equipment before it gets out of hand. After all, the easiest way to become more profitable is to keep your overhead under control and finances organized.


I hope you enjoyed this article about how to keep costs low in a lean startup or bootstrapped business.

Interested in more articles about running a frugal business?

Read My Posts:

- Budget Basics Office Expenses & Overhead 

- How To Save Money On Office Equipment

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