Each stage of the startup process has an uncanny capacity to weed out the weak from the strong. The first stage is weeding out those people that want to have their own business but are fundamentally terrified of what that would entail. They can’t manage the fear of losing their financial security and the risks they would have to take.
The next stage is to weed out the people who talk about having a business but don’t ever do the work necessary to make it happen. You know these people. They’re always keen to tell you about the business ideas they haven’t put into action.
Then, finally, there are a third group of people who just think setting up a business is too expensive. To be successful, they believe that they will practically have to bankrupt themselves. And the risk is that it won’t pay off.
But there is another way for this final group of people. No, you can never eliminate the risk of setting up a business. But you can do a lot to reduce the cost of starting up. In fact, with modern technology, it’s quite amazing what can be done. So where to start?
Work From Home
Thanks to mobile computing, the internet and the cloud, working from home has never been easier. Working from home saves you money on renting or leasing space for offices. It means that if you’re on a tight budget, you’re far more likely to reach that all-important break-even point sooner. Compared, at least, to the scenario where you’re paying a significant upfront rent cost.
In fact, it’s becoming more and more acceptable for small businesses to operate from their home. Companies want the convenience and low costs of a home office, and buyers want the lower prices that this affords.
There are costs, however, to working from home. For one, many businesses require more than a residential property to carry out their business. Food companies will find it hard to create a viable business from a home kitchen for example. And any business that requires heavy equipment will find it almost impossible. For these businesses, alternative premises will be needed.
But also, working from home is not seen as professional, in some industries, as operating from a central office. Clients may be less willing to do business with you if you’re forever entertaining at your house.
There are, however, some solutions to this. First, you could offer consultations over the Internet. If you go down this route, make sure you have a great internet connection, camera and microphone so that you can stream in HD. You want to be able to convey a sense of quality and prestige in your service. It shouldn’t just be any old grainy Skype chat. Having a decent background can really help in this regard.
Second, you could hire out conference rooms. Many small consulting firms will actually hire out conference rooms on an as-needed basis. This means that they can maintain the appearance of professionalism while saving a fortune on rent.
Third, you could use a virtual office. Virtual offices are, in fact, real offices that you share with some other firms. All the companies involved pay a small amount into a bit pot that pays for the rent on the office.
This option is more for businesses that want to dip regularly in and out of office use but still retain a professional front. No, you won’t have exclusive access to the offices themselves. But you will have access to offices for a set number of hours each month for entertaining clients and holding board meetings. Plus, they’ll usually throw in free secretarial services and business cards on which to put your new prestigious address.
Buy Used Equipment
Many firms make the mistake of thinking that they need to buy all-new equipment for their enterprise. However, this couldn’t be further from the truth.
There are always opportunities to save. For example, SJH Allplant Used Plant Equipment is a fraction of the price of the equivalent new.
Even for those who only require a home office, the savings are potentially enormous. You can convert your existing assets, like your home computer and printer into business-use assets. And in the process, you can build up a set of tax-deductible assets that could potentially save you money.
Change Your Business Status As It Grows
Many small businesses start off as sole traders. This is because they are much easier to set up in most cases. But they also mean that the company and the person are the same legal entity.
To begin with, this is fine. You’re unlikely to be taking on large debts to expand initially, so it doesn’t matter so much if the business is not a separate legal entity.
However, as the business grows and takes on more debt, it may be worth transforming your business into a limited company. Yes, doing this is a little more expensive, but it means that if the business does go wrong, you aren’t personally liable for the debts. That would be good news if you were one of those people terrified of risking your home and car for your new enterprise.
Don’t Get Suckered Into Services You Don’t Need
The internet is replete with advice concerning running a successful business. And very often this advice entails spending a lot of money on ancillary services.
As a small business, you can spend money on pretty much anything you want. From paying people to stand on street corners to advertise your business, to getting somebody to scan and upload your mail. The options are nearly endless.
That means that you have to be ruthless when considering which services you accept and which you reject. Most businesses employ an accountant, for example, because accountants offer a host of benefits. They protect you from the tax authorities, and they can often generate savings far more than their asking price.
Other services will need to be carefully costed to find out whether, on balance, they provide a benefit.