We all know that running a business can be expensive work. Whether you’re hiring new staff, developing a new product or marketing your brand in new territories, your cash flow can quickly suffer and leave you feeling concerned about the future of your business. But the good news is that you can operate on a shoe-string budget, to maximize your profitability and increase your opportunities and flexibility.
Below, we chat to Craig Dempsey, the founder of Biz Latin Hub, about how best to operate on a small budget, save more money, and ensure your organisation remains afloat.
Startup Businesses Have Very Little Capital. How Can They Get Off The Ground?
Startup businesses will probably benefit the most from operating on a shoe-string. From my time running Biz Latin Hub, I know that startup businesses can be put off by their lack of capital, but it doesn’t have to be the make or break of your business. Venturing into a new business no doubt includes some risk, but you should start by just doing what you know best. Find a skill that you are good at and are passionate about, and utilise it to make money. Once you’ve got your plan in place, then wear all of the hats in your business - in the early days, at least, you cannot afford to pay for accounting or marketing, so do it yourself and learn to balance your time effectively.
Working from home is another great way to reduce your running costs. Renting offices can be very expensive, especially in the early days of your business, so head to IKEA and buy a desk and a comfortable office chair and make do with that. Doing so will also reduce your commuting costs, and you can meet potential clients at local coffee shops or over the phone via Skype.
Other ways to cut the costs include using free online website builders or templates, rather than paying thousands of dollars for a custom website, and using cloud computing rather than buying servers and paying for IT staff. You can market your business through social media, and through word of mouth, asking friends, family and existing clients to spread the word about what you do, and you can consider business opportunities such as drop-shipping, which means you’ll never have to carry your inventory or worry about distribution, knowing everything is covered for you.
What Advice Would You Give To Businesses Looking To Save Money?
I think that one of the best ways to save money as an already-established business is to take things back to basics. Take a step back and think about your spending - for example, employees don’t need premium coffee - they can buy their own or manage with a cheaper supermarket brand. The same can go for things such as marketing - the average business will spend 10% of its revenue on marketing, but if you can find cheaper, or free, alternatives, then you can cut this cost and wave goodbye to your marketing agency. Marketing via word of mouth works best, but you can also ask customers to spread the word, partner with other local businesses and share an advertising slot, or offer expert advice in hopes that you’ll be featured in newspapers and magazine articles. Free advertising opportunities are everywhere - you’ve just got to be savvy and look for them, and always be on the ball so that you can get ahead of your competition.
Your Business Helps Companies Expand Into New Territories. Surely That Is Expensive?
Of course, there are costs associated with entering a new market, but small and medium-sized businesses are often surprised at just how affordable it can be. Once you’ve got company formation out of the way, which is relatively straight-forward and inexpensive in itself, you can focus on growing your business in a new market through marketing and networking.
Countries like Peru, for example, are seeing brilliant levels of inward entrepreneurship, with high GDP growth and increased foreign investment. By choosing an established market like Peru, where there is a growing middle class, you can quickly establish a presence for yourself, and utilize Latin America’s ‘family first’ culture, where a sale to one person will have a ‘domino effect’ and encourage lots of word of mouth marketing and recommendations from their friends and family.
There are other costs associated with running an international business, of course, including recruitment and human resources, but many of these things can be outsourced (by using techniques like working with Professional Employer Organisations) which reduces risks, lowers your barrier to entry, and means that your ‘exit plan’ will be affordable and easy to pull off.
Do You Have Any Other Tips And Tricks?
Absolutely. If you’re not prepared to spend thousands of dollars designing a new website, writing blog posts or running your own social media handles, then consider using freelancers. In a recent article on the future of entrepreneurship, many cited that freelancers were the way forward - not only because they help more people work for themselves and generate an income, but because they also cut out the middleman and allow businesses to access top talent without having to sign a contract or pay for endless services.
If you’re looking for a one-off piece of work then it makes sense to pay a freelancer, rather than hiring a new member of staff. Hiring online professionals or utilizing online services is also a budget-conscious move for bootstrapping businesses. To help keep costs low consider using an online accountant. They often offer the same service as a high street accountant however at up to half the cost. You can read more here.
Not all freelancers are created equally, however, so I recommend using services like Fiverr to look for talent and negotiate work before you get started. You’ll need to match your needs with their skills and experience and give them regular feedback to ensure you’re getting the very best services and the very best value for money. Freelancers allow you to run your business on a shoestring budget, giving you more money to spend on paying staff, developing new products or even coming up with new business ventures, so don’t overlook the power of utilizing such talent.
The truth is that there is no one-size-fits-all solution to saving money as an entrepreneur, and it takes a lot of time and experimentation to get to where you want to be. Play around with the techniques I have mentioned, and see what works for you. I wish you the very best of luck!
I hope you enjoyed this article about how to run a successful company on a bootstrapped business budget.
Interested in more articles about bootstrapping your business?
Read My Related Posts:
- How To Start Your Shoestring Marketing Campaign
- Low Risk Bootstrapped Business Ideas On A Budget
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