Simple ways to Save Money in your Startup!
For start-ups, every dollar counts. While you’ll obviously be trying to cut down on costs wherever possible, there are a few areas many business owners often don’t think about when looking at their spending. By keeping the below tips in mind, you’ll be able to save money for your start-up without compromising your core services.
Cut down your tail spend
While you’re most likely focusing on cutting down spending with your main suppliers, tail spend – those things you purchase that don’t directly drive your business – can actually make up 25-30% of your business’s total costs. Since these costs are usually split over several suppliers, and each order is generally quite small, it can be easy to overlook, but cutting down your tail spend is a great opportunity to get some significant savings in an area you may not have previously focused on.
One thing that can be difficult when trying to save money on your tail spend is benchmarking what the prices should be. As you don’t have the buying power of bigger businesses, the rates that suppliers charge you are often higher. By joining a buying group or aggregator such as SME Savings you can get the best deals and have someone else do the hard work tracking down the bargains for you.
Get online and bring in the experts
As a start-up, you’re going to have to focus on getting your core business off the ground, and won’t necessarily have the time or the expertise to handle every aspect of your business. Don’t be afraid to look into the ever-expanding world of outsourcing – it can be a cost effective and clever way to achieve the results you require. Some areas to consider outsourcing include, accounts functions, marketing and PR, accounting, IT, legal work, purchasing and reception duties.
The growing popularity of online resources for outsourcing mean that you’ll be able to find the service you want at a price you can afford – consider looking on sites such as Freelancer.com or ODesk to find professionals who can help your business move forward while you focus on doing what you do best.
As well as outsourcing some business functions, you might also consider going online to find buying groups or aggregators, which can provide immediate savings for your business, particularly if they provide contracted or negotiated pricing for ongoing use and not just one-off specials.
Groups that provide ongoing contracted or negotiated pricing discounts can immediately save you money on things like banking services, office products, fuel, HR, training products, IT, courier services, waste removal and other common-use goods and services. Make sure you do your research into a group before joining; some buying groups can charge joining fees or ongoing costs. However, there are some buying groups that are free to join that focus on providing deals to SMEs.
Watch your stock levels
Buying stock is one of the main expenses for many small businesses, and has a massive impact on your cash flow. You need to make sure you have enough stock to service your clients, but don’t want to have your cash sitting on the shelf. It’s important to carefully monitor your stock levels compared to your orders to make sure you’re walk the balancing act that ensures you’re not wasting your cash.
Some start-ups can also fall into the habit of keeping products that are slow moving or high cost – it may be worth reassessing the size of your stock list to eliminate these low-profit items that take up valuable storage or shelf space. It’s vital to make sure you keep close track of your stock list, and the amount of stock you carry, to ensure you are operating at optimum efficiency.
Another area to look at is the timing of your ordering. You can save cash on storage and improve your cash flow by reviewing when the bulk of your orders are received and ordering at these times. You should also make sure you’re taking the best advantage of your credit account with suppliers.
The pressures of being a start-up mean you have to cut costs wherever you can. By finding discounts where you can, outsourcing when you need to and watching your stock levels, you’ll be able save money and help your start-up thrive.