“You need to spend money to make money.” Anyone who has founded a startup knows this old adage contains quite a bit of truth. That said, most people who found startups and small businesses also have tight budgets. While spending money is vital to your success, so is saving money whenever possible.
Luckily, it can be easier than one might assume. If you’re thinking about starting a small business, keep the following cost cutting tips in mind. They’ll help you make the most of your budget during the critical early stages of growth.
1. Search For Open Source Software
You’ll probably need to use several different types of software to run your business; word processing programs, accounting software, project management tools and more. Additionally, depending on the nature of your startup, you’ll likely need to rely on specific niche programs.
Don’t make the mistake of assuming you need to spend money on all of these items. Do an online search for open source options, which, in many cases, will locate free programs that suit your needs perfectly.
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2. Outsource Your Work
Many startup founders are responsible for handling a wide range of tasks when initially growing their businesses. You’re probably in the same position because you simply might not have the budget to hire a full team of employees.
That said, there may be some tasks you’re not qualified to handle on your own. For example, if you have no marketing experience, you’ll probably want help developing your first marketing campaign.
That doesn’t mean you need to hire a full-time marketing specialist to work for you. Instead, you’re better off hiring a contractor or freelancer for this type of work. This allows you to optimize your budget by not paying employees when your current needs don’t justify hiring someone on a full-time basis.
That’s just one example. Whenever a task you’re not qualified to handle arises, consider whether you could save money by hiring a freelancer.
3. Carefully Evaluate Every Purchase
This is a simple tip, but it’s one worth mentioning. You will obviously need to purchase certain tools and resources when starting a business. While some of these will be essential, there will likely be instances when you’re considering making a purchase that isn’t necessary at this time.
Keep that in mind every time you’re thinking about buying something for your business. For every single purchase, evaluate whether you need that particular item or service now, or whether you can justify waiting until you’re more financially stable to make the purchase.
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4. Automate Your Work
Time is money. The more time you can spend on tasks that drive revenue, the more money your business will make. That’s a basic but undeniable fact.
Again, this can create problems when you’re responsible for handling many tasks. That’s why you need to save time by automating tasks when it makes sense to do so.
For example, if social media is one of your top marketing channels, don’t waste time manually posting consistently. Instead, create most of your posts ahead of time (there will still be instances, however, when you might post spontaneously to take advantage of a trending topic), and schedule them to post automatically using social media automation tools.
5. Don’t Rent a Traditional Office
There’s a good chance you won’t need a full office when first growing your business. When the company gets larger and you hire more employees, traditional office space might be necessary, but during the early stages, this likely isn’t the case.
This presents another cost cutting opportunity. You don’t need to rent office space if you don’t need it just yet. Instead, you can work from home using a virtual office if you need such amenities and features as a dedicated mailbox. If you do need some type of office space, consider a coworking office. Rent is much less expensive than traditional office space, and the lease terms will be far more flexible.
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6. Research Tax Write-offs
This tip is particularly worth keeping in mind if you’re starting your business from home. Odds are good you qualify for tax write-offs that can help you save money. It’s important to research them to learn more about your options.
Most importantly, stay on top of your finances. Regularly monitor and review your budget, revenue and spending to make sure you’re using your money wisely. By keeping a close eye on your money and applying these tips, you’ll boost your odds of achieving long-term success.
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Rae Steinbach is a graduate of Tufts University with a combined International Relations and Chinese degree. After spending time living and working abroad in China, she returned to NYC to pursue her career and continue curating quality content. Rae is passionate about travel, food, and writing for Funding Circle.
