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Five Simple Ways Startups Can Save Money

Squeezing the ShoestringSara Sutton Fell, founder and CEO of FlexJobs in Boulder, Colo., knows that coupons and deal sites aren't just for consumers. Over the course of a year, Fell saved about $2,500 by using sites like RetailMeNot.com and CouponCabin.com to cut costs on everything from customer gifts to office equipment.

"It's something many people do as consumers, but something I think a lot of businesses overlook," she says. By simply typing in the name of a computer seller and the words "coupon code," she was able to save $800 on computer monitors for her company.

Frugal business expert Shel Horowitz, author of Grassroots Marketing: Getting Noticed in a Noisy World, advises startups to be relentless in their search for savings. Here are five simple ways to do exactly that.

1. Buy used. Very few businesses need expensive new furniture, filing cabinets or other fixtures, Horowitz says. Often used-furniture stores, auctioneers selling business assets or even Craigslist posts offer big savings on used office furniture and equipment.

2. Skimp on overhead. "I see a lot of people going into a fancy office or retail location when they could get by with something much simpler, and that puts enormous pressure to generate revenue faster than they are likely to," Horowitz says. While launching from the garage or kitchen table won't work for every business, he advises holding off on committing to expensive real estate leases until necessary, especially if your customers don't frequent your place of business very often.

3. Get help as you need it. Horowitz suggests visiting online special-interest forums in marketing, sales and other areas to read discussions and get ideas. He also suggests hiring talent only as you need it: "If you find someone who knows what they're doing, it might be a good idea to hire them on a consulting basis for a few hours. That way, you get the advice you need without committing to a full-time salary."

4. Barter. Bob Syracuse, co-owner of Pizza Plant Italian Pub in Williamsville, N.Y., remodeled his restaurant and purchased advertising through a barter group. He estimates he trades about $20,000 worth of food and services per year, saving an average of $4,000 per year in the difference in value between what he receives and the actual cost of what he barters. "We still have to pay sales tax, which we would pay anyway. We also get a 1099 for anything we've purchased, but from that, we can deduct the expenses of what we have provided," he says.

5. Be frugal. Shopping around for the best price is smart business, Horowitz says, since every dollar saved is a dollar that can be reinvested in your company. That fuels growth and leads to more opportunities and cash-flow flexibility.

Gwen Moran is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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This article was originally published in the March 2012 print edition of Entrepreneur's StartUps with the headline: Squeezing the Shoestring.

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