...On a budget
In part 3 of our start-up guides for new businesses, we look at the multitude of resources which are available to those launching on a limited budget.
You might think that it takes a lot of funding to grow your business from scratch. This is not always the case. If managed well, a lean approach to budget-setting at the start can set the tone for a more profitable business down the line. Here are some savvy tips for making real savings in certain parts of your business.
Launching your business
- Test it out first
The key here is not to buy anything until you really need to. And when starting out, don’t buy what you can rent and don’t rent what you can borrow. You want to be concentrating on gathering as much information as you can, so you know whether your concept works. This is why, before committing yourself to any long-term contracts or purchase agreements, rent premises and equipment and take on staff as contractors instead of employees.
- Registering your business
It’s free to register your business as a sole trader with HM Revenue & Customs and it comes with the benefit that you don’t need to use an accountant to fill out your personal tax form. Once you hit higher turnover rates of £50,000 or profits of £40,000, consider registering as a limited company. This is where you’ll need an accountant to extract funds in a tax-efficient way.
Getting the right kit
- Computer hardware
There’s no need to splash the cash with computers and software when starting out. You can get a decent laptop and printer for under £500, and printers very often double up as scanners and faxes. Consider also refurbished items from reputable stores that will save you money. Depending on the deal you strike when buying a computer, you may have MS Office software built in for word-processing and spreadsheet requirements. If you can’t afford to buy the software outright, look at free open source options such as Open Office. Store documents in free cloud-based solutions such as Dropbox or Google Drive – you can then access them from anywhere, and it’s also good if you’re part of a team.
- Business website
You can spend a lot of money on a website, as you might think this is what you need to get your new business seen online. Ranging from DIY web-based solutions to full-blown, fully hosted sites – they’re all out there. Before committing yourself, consider what skills you have and the time available. Free Wordpress sites can be great if you just want a showcase for your products/services. Look at low-cost websites options, such as those from Clever Business Websites, that don’t require set-up or contract fees being paid, and give you hosting, updates and SEO thrown in.
- Get connected
Find the best deals for your phone and broadband requirements by using comparison websites such as www.comparethemarket.com or www.moneysupermarket.com . Look to see how much call-time and broadband usage your business is likely to use, to hunt out the best packages. Before jumping in the car to go to a meeting, look at free video-call solutions like Skype to save fuel which work over broadband. Google Hangouts, part of Google +, is another free option for connecting with your business contacts.
Get your marketing right
- Social media
Traditional print advertising can be a hefty outlay when starting your business, so cut down on costs and promote your business via social media such as Facebook, Twitter and LinkedIn. This is not a quick-fix solution, as you need to invest the time to build and engage with your audience, but it can reap long-term rewards.
- Tell your story
If you started up your business in an unusual way, or you know you’ve got a good story to tell, try approaching magazines and newspapers as they will often feature inspirational tales on budding entrepreneurs.
- Business networking & trade shows
There are many business networks available, depending on the type of business you are in. Look around locally for groups that you can join, many of which are free or low-cost, to start connecting with like-minded individuals. Along with attending trade fairs and business exhibitions, some of which can also have free admission, this is a great way of spreading the message about your business.
- Swapping expertise
You don’t have the budget, but there can be ways of trading your skills and expertise for something you really need and which is missing from your business. This is where establishing a professional support network is key, and joining business networking groups can facilitate this. There are also trading platforms such as Fabulous Women's Skill Swop, where people can post the skills or services they are looking for and what they can offer in exchange.
Manage your money
- Line up contracts before you launch your business
- Negotiate favourable payment terms with suppliers
- Make sure all your costs are included in your business plan: premises and vehicle costs, operational costs, as well as any professional fees, interest on your overdraft, insurance, and contingency for illness.
- Keep financial forecasting straightforward and know how much it’s going to cost to run the company over the next 6 months
- Getting your cashflow right
If you’ve read parts 1 and 2 of our start-up guides, you’ll know that managing your cashflow is a big challenge for new businesses. Try and avoid giving credit and therefore suffering from late-paying customers; instead get a percentage of the payment upfront