On average, a small business spends about $40,000 in its first year. Those start-up costs can be broken down into a few main categories. These startup expenses include product costs, operation fees, online expenses, standard bills, shipping costs, staff payments, and marketing.
Typically, product costs, staff payments, and operating fees are the top budget draws, coming in at 31.6%, 18.8%, and 11%, respectfully. All of that adds up quickly, and it can feel overwhelming when you’re just starting in business.
Luckily, there are some ways you can save money without sacrificing the quality of your business and products. So without further ado, let’s explore three clever ways you can incorporate frugal solutions when starting a business.
1. Produce Painlessly: Pay Less To Manufacture Your Products
The first area you should investigate when you’re ready to cut costs with your frugal business is how much you have to spend to produce your products. If you discover that it accounts for the biggest cut of your budget, it’s time to consider rethinking the manufacturing process. You can cut down on these costs by:
● Adopting newer technologies. There are computer programs that can help cut down on planning and executing costs.
● Implementing a high standard of quality control so fewer materials are wasted on products that can’t be sold.
● Investing time and energy in safety training. Injuries lead to lost work hours, which cuts down on your funds.
● Using smart technology to save on energy costs during production. This cuts down on electricity use, which lowers your overall expenses.
● Negotiating with your supply chain to get the best price on your raw materials and delivery costs.
When you save money on production, you can speed up the process of opening your business or allocate money to other areas.
2. Hack Hiring: Save Money Finding Your Staff
On average, it costs several thousand dollars to hire just one employee. That means that the cost of acquiring an entire staff can easily get up into the tens of thousands. If you don’t have the funds for that, you may need to consider non-traditional ways to find good employees without breaking your budget.
Taking out advertisements, and paying for job board posts, can add up quickly, and you never know if the applicants you get will be worth the cost. Rather than waste time and money on that process, you can hire a company to help you improve your recruiting process.
They’ll help you design the best plan to present your company and the role, in a way that attracts the quality of candidates you need.
The process will begin with you working on your branding materials. One example of this is creating video testimonials of current employees talking about their experiences at your company. This helps people understand what the atmosphere is at your business, and decide if it’s the right fit for them.
Next, you move into the technical side of recruiting. This is where your HR data is gathered and your recruitment team comes up with a plan to draw in the employees you need. After that, the strategy is put into place using social media campaigns, digital marketing, and any other necessary tactics.
Once this is done, you sit back and wait for applications from genuinely interested applicants to begin coming in. This way, when you move on to interviewing, you know you’re choosing between people who understand your unique missions and goals.
3. Optimize Operating: Cut Down On Your Business Expenses
The last frugal solution is to cut down on your traditional business expenses. To ensure that you’re operating on the smallest budget possible, consider:
● Renting or owning the smallest physical space you can. This will save you money both in building costs, and heating and air.
● Searching for small ways you can save. Turning off devices when not in use, using energy-efficient machinery, installing low-watt bulbs, and leaving the thermostat at a higher temperature during the summer are all small steps that add up quickly.
● Finding the most cost-effective insurance to cover your business.
● Doing a cost analysis report to determine where you’re spending the most money. Do you have a ridiculous electric bill? Identify the problems and work on ways to eliminate or reduce them.
If you continue to analyze your spending as you move through the process of building your business, you can adapt and change to suit your needs as you go. Opening a frugal business doesn’t have to cost $40,000, as long as you’re willing to put in the time and effort to keep costs low.
Cut Company Costs Creatively
Business expenses can add up quickly, but if you implement these frugal solutions, and add more of your own, you can create a budget that works for your small business. Don’t forget to reevaluate as you grow and come up with new clever ways to save a dollar.
