You're Building a Company From the Ground up: Where to Spend and Where to Save
Building a company from scratch is no easy task. I know: I've done this successfully a handful of times.
I also know that I've learned a lot about the many expenditures you have to account for, from office space and employee salaries to taxes and marketing. But, thankfully, you don't have to do all of this alone -- which means that the main question you face is, exactly where should you spend your money? And, what are the best resources you can turn to, to help build your business without breaking the bank before you even start?
Here are a few tips regarding the areas where you can save, and where you would do well to spend.
Initiating your business is the first and most important step. To do this, you'll need cash. I like to bootstrap (build without investors) or first build enough value to bring on investors later. But, there are times when a loan can be a good option. Many people go to banks they are familiar with, but that process can take weeks.
Meanwhile, there are other, and faster, lending options for entrepreneurs, especially for those with a healthy credit history. Examples include Currency Capital, The Entrepreneur Fund and Kabbage. These companies streamline an applicant's approval and funding process by getting a more complete financial picture at the beginning of the application process. The applicant submits basic information so his or her business-credit worthiness can be assessed.
"Hopeful borrowers receive approvals within a few minutes 60 to 70 percent of time, Currency Capital’s vice president, Jared Takeuchi, said in this Nerd Wallet article.
Currency Capital is a platform of multiple lenders, each with his or her own respective criteria, so it connects applicants with a best-fit match. Not only is the process quick, but loan amounts can range between $5,000 and $2 million, with competitive APRs.
Establishing your brand
Visuals are imperative to your brand. This means a strong logo: Even without their full company names printed out, McDonald's’ signature "M" and Starbucks’ two-tailed mermaid are familiar to just about everyone. A strong logo grants you legitimacy and the ability to “stamp” products or services as verifiably yours.
How do you get a good logo? You don’t have to hire an expensive graphic designer or go through a boutique agency to achieve the desired result. This is one area where it’s best to save money rather than spend it. Even though a logo will (hopefully) last for a long time, there are online tools that make it a snap to build a unique logo on your own. Deluxe Logo Design is inexpensive and easy to use, and you can experiment with its numerous templates without paying a dime until you’re satisfied.
Planning for accounting
Depending on your passion, you’re likely starting a business because you want to pursue your interests more than because you love finance and accounting. Accounting is still a crucial aspect of any company, though. So, should you hire an accountant from the start, or do it yourself?
Odds are you will need an accountant eventually, especially as your business grows. While your company is still in its infancy, however, accounting software may fill your needs. As Investopedia says, about taxes: “Good tax preparation software walks you through the process very quickly and easily. For those who have only a few deductions, sources of income, or investments, there is little need to sit down with an accountant to sort it all out.”
Ultimately, the decision to hire an accountant or not will depend on how complicated your business model will be. If you need extra help, another pair of eyes -- belonging to someone with experience -- will be worth the cost; but if you don’t have a complicated finance system, inexpensive software is probably fine.
Setting up an office
This is the digital age, so a significant amount of work can be done online. Construction companies may not have this option, but ecommerce ventures and other services that do business on the internet will likely find rented office space unnecessary.
Many companies are actually becoming entirely remote, using employees from around the world. I run three of my own companies remotely, thanks to various tools and cultures focused on results.
If you (and your potential team) can work remotely, there are online project management and workflow platforms like Slack that can streamline communication and productivity. Online businesses also have a much broader pool of talent to choose from, since offices require hiring locals or relocating people; but distributed teams are open to anyone.
Planning for marketing
Marketing is an area where if you can avoid costly advertisements, you should. An Entrepreneur article on saving business costs suggested that splitting costs with fellow business owners can be a benefit. “Split advertising and promotion costs with neighboring businesses," the article advised. "Jointly promote a sidewalk sale, or take your marketing alliance further by sharing mailing lists, distribution channels, and suppliers with businesses that sell complementary goods or services.”
Online businesses, in particular, should work on social marketing. They can cultivate their social media channels, which audiences are often more likely to find organically than the business's website, and they can do so in a way that promotes their efforts and willingness to listen to customers.
If you are just starting a business, then, don’t feel compelled to spend vast amounts of money every step of the way, believing that those expenditures will result in increased ROI. If it’s cheaper to do it yourself and you’re capable, why not give it a shot?