Starting your own business can be incredibly rewarding. Not only will you have an avenue to generate revenue and accumulate wealth, but you’ll also be able to set your own hours, be your own boss, and build something to serve as your legacy. Of course, starting a business isn’t always easy; the average business costs $30,000 or more to get started.
Money is often the biggest limiting factor in initial business growth, but there are many viable strategies you can use to save money when starting a business—and none of them will compromise the integrity of your business plan.
Choose the Right Type of Business
One of the most important things you can do is choose the right type of business to start. With some business models, you’ll need to purchase millions of dollars of equipment to start manufacturing, and spend millions more on research, development, and technological innovation before you can make progress. But you could also start a dog walking business with literally nothing but a $5 dog leash.
If your primary goal is just starting a business as inexpensively as possible, consider looking for types of businesses that can be started with minimal initial capital. There are plenty of options here, most of which revolve around providing services rather than products.
Take Advantage of Free Resources Online
Next, when building your business, take advantage of the free resources you can find online. Rather than paying a professional consultant to teach you about how to write a business plan, use an online business plan template to guide your development. Instead of paying a professional designer thousands of dollars to come up with a handful of logo concepts, consider using a free logo maker.
Free options aren’t always as valuable as paid options; you may be able to get better-quality products and/or services from experts and agencies. However, if you’re trying to start a business frugally, this is a critical opportunity to trim your expenses. You can often reduce an expense of thousands of dollars down to nothing—you just have to do some searching to find it.
Minimize Office Expenses
Too many new entrepreneurs think they need to invest in a lucrative office space to make a better impression with clients or work more professionally. However, renting an office can be ridiculously expensive. Even for a small business with a small layout, you could end up paying thousands of dollars per month in rent, and even more in office supplies.
If you can, consider working remotely and eliminating this expense from your ledger altogether. If that’s not a possibility, consider taking advantage of a shared workspace, or consider subletting a space or sharing it with another business to reduce your total expenses.
Another major expense faced by businesses is the cost of hiring and maintaining employees. New entrepreneurs are often excited to build a team and start working together, but every new hire you make is going to put a burden on your finances—often above and beyond their base pay. If you hire too many people too quickly, it’s going to compromise your ability to make money.
Instead, consider hiring only the people you absolutely need. For many businesses, this is only one or two people to start. If you’re finding yourself struggling with your workload, you can always close the gap by working with independent contractors.
Negotiate on Everything
In the early days of setting up your business, you’ll be spending money on a lot of things, including pay for your employees, raw materials, rental and utility costs, and other goods and services. You can reduce what you pay in almost all of these categories with one simple strategy: negotiation. Negotiate on everything you buy, and try to get your prices lower. You’ll be amazed at how often you can get a better deal on something just because you asked for one.
Find the Right Type of Funding
This isn’t necessarily a way to cut your expenses, but you can improve your business’s financial situation by finding the right type of funding. Working with an angel investor or venture capitalist might require you to give up a portion of your equity in the company, but it might also grant you access to enough money to make your initial expenses a non-issue.
With these strategies, you should be able to cut your business startup costs dramatically. Assuming you have a minimalistic business model, you could end up starting a business for just a few thousand dollars—or even less. Be sure to estimate your expenses conservatively, and put an emphasis on generating revenue early, so you can have a steady stream of income to fund your next purchases.