Keeping Your Costs Down
There's a fine line between starting your business on a shoestring and letting it fail due to a lack of resources. You don't want to shell out big bucks just to get going, yet you want to look professional in the eyes of your customers.
The paradox and the challenge is to maintain the image of a solid, successful company without letting your expenses lead to uncompetitive pricing.
The trick is to determine the point at which your business runs both effectively and efficiently. This is a key issue for any startup that can determine whether you'll be able to survive. The good news is, if you master the art of trimming expenses early in the game, you'll develop good habits that'll serve you well as your company grows.
The first thing to do is cut your initial budget to the bare minimum. Chances are your business will start slow, so doing things for a dime that would otherwise cost a dollar is a great discipline. Here are some tips to keep early costs under control.
Where you work often determines how well you work, but you can probably rough it a bit while still getting things done. For instance, you need a desk. Why not buy a good, secondhand desk from an office furniture rental company? Discount stores have great buys as well. Or get to know some of the bigger companies in your area that are upgrading their computers and are prepared to cut a deal to get rid of their older items.
Another suggestion is to negotiate with your landlord for free rent during your startup phase. Many office buildings are willing to reduce or even forego rent for as much as a year just to get tenants in the door.
Tools and Services
Everything from paper clips to computers are your work tools, and everything from phone charges to business consultants count as business services. All these items are fair game for bootstrapping.
Buy office supplies in bulk whenever you can. Lease equipment and vehicles, rather than buying them. Keep your fixed costs down by turning as many tools and services into variable expenses as you can. That way your cost of doing business will grow only as your income grows.
Controlling labor costs is probably the most formidable challenge you'll face. Don't learn the hard way, for example, that turnover wreaks havoc on your profits. When it's time to hire, do it carefully and intelligently. And if a person's performance isn't what you'd like, don't be quick to fire them. Work with them to improve.
While competitive compensation is essential to attracting good people, it doesn't have to all be in the form of salary. Remember the tip about turning your fixed costs into variable ones? It works in compensation as well. Supplement a small salary with the potential for healthy bonuses based on your company's earnings.
Give your employees perks, such as flexible work hours. Train them adequately for their responsibilities. And take the time to give them feedback and praise. Be passionate about your company and about them.
It takes money to make money, but you'd be surprised how much marketing bang you can get without spending many bucks.
Word-of-mouth is the best and cheapest form of advertising, but that means a lot of networking. Attend business and community events to talk about your company, and don't forget to focus on your most desirable customers. Cultivate opportunities to be a featured speaker. Work the trade show circuit, even if you don't have the money for a booth or exhibit.
Don't forget the value of free media coverage. In the beginning, at least, you can make a reasonable go of PR by yourself. Call editors at publications important to your industry to let them know you exist. Write one or two short, newsy press releases and get them out to key newspapers and magazines. Request interviews on topics of interest to both you and reporters. Even one or two stories can generate a sizable amount of business.
Keeping startup costs to a minimum takes self-examination, resourcefulness and creativity. But as your business grows, you'll find the skills, when mastered early on, will be keys to your ongoing success--and the real enjoyment of your business.