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There's a common expression that says you have to spend money to make money. That saying is true … up to a point. It is also possible, and very common, to spend so much money that you dig yourself and your business into a hole from which you cannot get back out. Irresponsible spending of this nature is the reason that many businesses fail, often within only a few years of starting up.
The key is to be wise in your spending, prioritizing what you need to get your business off the ground. Once you are turning a profit, you can then re-evaluate your priorities and look into some nice-to-haves in addition to essentials. Here are some ways to save money when you are first starting out.
1. Go Green
Adopting sustainable practices early on not only makes sense from an ecological point of view, it can also help your business save money. For example, the decision to buy solar panels not only reduces your energy costs, but it can also augment your income. It may be possible to store the energy that you don't use and sell it back to the power company.
2. Buy in Bulk
For things that you use all the time, such as product materials or office supplies, you can often get a discount when you buy in bulk. However, you should be cautious and only do this for items that you really need and know you will use. If you purchase more than what you need, not only is that a waste of money, but you will also have to figure out something to do with all the excess. When approached carefully, however, buying in bulk can be a smart money-saving strategy.
3. Consider Outsourcing
When you first start a business, you may find that you have more work than you can handle by yourself, yet you cannot yet afford to hire employees. In a situation like this, you might want to consider outsourcing to an outside company that provides the services you need. When you outsource certain tasks, you only pay for the work that gets done. You don't have to pay hourly wages, employee benefits, or workers' compensation insurance. When you start making more money, you may decide to hire employees. On the other hand, if you feel that outsourcing works well for you, that arrangement can continue for as long as you need it.
4. Try Bartering
If you have a valuable asset that is no longer useful to your business, you may be able to trade with a similar company in the area that has something you do need. This allows you to simultaneously get what you want and unload what you don't, all while spending little to no money. Try to find other start-ups that might be interested in bartering because they are likely looking for ways to save money, just as you are.
5. Buy Used
The downside of bartering is that you may not have anything of value to trade, at least not at first. However, even if you have to buy equipment, you do not necessarily have to purchase it brand new. You can often find used business equipment from auctions or stores that specialize in it particularly.
Don't assume that used office equipment is automatically junk, either. Because so many businesses fail within a few years of start-up, a lot of the used equipment may be next to new.
6. Go Virtual
A brick-and-mortar location may not be feasible right now, but that doesn't mean you can't get your business off the ground. Depending on what you have to offer, you can start out running an e-business from your home. Transactions and communications with customers, suppliers, and employees, if applicable, can all take place online. Some people like the freedom that this affords so much that they continue operating the business virtually and never move to a commercial building.
When you start a new business, you have a vital role to play. Entrepreneurship is the backbone of the economy, so your success matters to everyone.