With the average UK start-up spending over £22,000 in its first year, finding ways to reduce costs early on can be the difference between survival and going under. Here are some tips on how you can reduce your start-up costs.
Shared office spaces
Your office rent and associated costs can be one of the main costs that a small start-up can face, particularly with the large competition driving up prices in many capital cities around the world. Now is the perfect time to jump on the co-working bandwagon, which has boomed in recent times and is set to continue to grow. There are now even businesses like Cornerstone Office Search that help you find the ideal co-working space for you and your work routine.
Co-working is, in essence, the sharing of a workspace by separate entrepreneurs or businesses, helping to reduce rent costs as well as offering flexible contracts which require little commitment, meaning you don’t have to stay around for too long if you feel like moving on.
Some co-working spaces also offer the bonus of providing living accommodation within the same building, which would eliminate any commuting costs and, essentially, rid the need of personal means of transport. You may, however, wish to go in the complete opposite direction, and make your business home-based, and have employees telecommute, getting rid of office costs almost completely.
Not only great for the conscience – and the PR – being more environmentally aware and friendly can be a smart financial move. Even simple things like turning equipment off when it’s not in use will visibly reduce costs in the long-run.
You can implement hibernation features on computers and laptops so they use much less power when not being utilised, especially if they are normally left on overnight and weekends. You can also replace your printer with one that prints on both sides of paper, essentially reducing your paper usage by half.
Any equipment that needs replacing can be done so with second-hand, or refurbished equipment, which will be cut-price and reduces your impact on the environment, if only a little, by stopping it from going to waste.
Outsourcing can help small businesses and start-ups reduce their employee costs because you are essentially only paying for the work that you get. You don’t have to worry about salaries, paid leave, and the like, which can certainly be beneficial for those companies strapped for cash.
If you decide not to outsource your employees, however, it may be a good idea to at least outsource the human resource functions, such as hiring, management, and HR compliance, with specific companies specialising in this. You may also wish to employ interns to begin with as well, to determine how beneficial hiring new employees would be, in relation to the overhead costs.
Inefficiencies in procedures
You should always be looking at the procedures your business uses to see where they can be streamlined and improved. This can help to reduce materials and time, which, in turn, will help to reduce costs.
Making sure to listen to ideas from employees as this can also be useful in identifying where you can save time and money, as different perspectives may offer you something you hadn’t recognised yourself.
Open source software
Almost all licensed software that you will be paying for has a free, open source alternative, offering you the chance to reduce these costs by up to 90%. Opting for computers or laptops that don’t utilise Windows OS, for example, will be much cheaper and can run open source operating systems such as Ubuntu. You can find open source, flexible and tailored alternatives to practically all software, including the likes of word documents and spreadsheets, that you will utilise as a company, so do your research and determine whether the savings will be worth the change.
With the leaps in technological advance, you’re now able to hold meetings with people without them having to be physically there. Using the likes of Skype and other available software, commuting and travelling costs will be reduced, even if you’re within the same city. If the meetings don’t require you to be physically present, there’s no harm in conducting the meeting virtually.
Reducing operating costs for small businesses is certainly not impossible, but it does mean being strict with where your money is going. Drastic changes are not normally needed, but by combining any of the smaller, more manageable alterations, they can quickly add up making it easier to work on a modest budget.