Starting a business is difficult but it becomes easier when you have access to funding.
A lot of people want to leave their jobs and start their own. But they do not have enough funds to put in place their ‘robust’ business plans.
The best option is to start a business on a lean budget, then expand from there.
Instead of waiting to raise a huge startup fund, you should rather start small and grow your business with the little resources that you have. This idea isn’t new as there are many examples of companies that started small and grew big that should inspire you.
Starting, even though on a small scale, will boost your ego and provide the drive to forge ahead. As an entrepreneur, I believe in starting small and I can’t stress the importance of starting a business on a lean budget enough.
What Is a Lean Budget?
A lean budget is an estimate of income and expenditure that allows you to cut overhead, maximize value, and reduce waste of resources. Its aim is to help you deliver optimized value to your customers with minimal costs.
Going lean requires you to work within your means and cut down on unnecessary spending. Getting the most of your resources requires discipline and a deep mentality. If you’re consistent and stick to your plan, you’ll grow bigger and achieve success.
In the following lines, you’ll learn how to run a business on a shoestring budget, whilst remaining efficient and profitable at the same time. Here you go.
Work From Home
Working from home has become the smart choice for many freelancers and small businesses across the world. In fact, a lot of successful brands such as Apple, Hewlett-Packard, Amazon, Google, and Disney started right from their garage. Today, they’re some of the most valuable brands around.
This is something you should consider especially if you’re starting a new business with modest finance. With the amount of available technology, your business will be fine even if you have a distributed team.
The biggest advantage of working from home is the opportunity to telecommute so you can save time, energy, and money.
Aside from this, working from home can make you more productive; it gives you more freedom and flexibility and boosts your creativity.
If you could create a workplace environment (that guarantees less distraction) within your home, that would help a lot.
Use a Coworking Space
A co-working space provides a creative and cost-effective way to conduct work-related activities. You do not have to invest in renting a large space or incur any cost of setting up an office.
Sharing a space with other professionals/freelancers or your team members allows you to focus on your work only. You don’t have to worry about maintenance, energy consumption, securing your property, and other responsibilities that come with running your own space.
The primary aim for sharing office space at this point is to lower cost but beyond that, it allows you to explore other important benefits. Sharing an office with others helps you to develop professional connections, boosts your creativity, and improves your standard of work.
Cut Down Spending
Every new business requires money. A lot of times, the money spent goes into putting certain infrastructure in place to ensure a smooth operation.
If you’ve got a high taste, you might want to spend more on office furniture and equipment. You might also think of getting high-end computer hardware and accessory, premium software, communication gadgets, and general office supplies.
You need to slow down. What you need at this stage is efficiency and not taste. So, you should only be buying what’s necessary and make sure they’re affordable.
Go for fairly used stuff instead of brand new, buy in bulk to save cost, and take advantage of deals and discounts. You have to be a good negotiator when making your purchases so you can get the best deal.
In doing this, you must be careful not to fall for cheap but substandard products. Remember, all you want are affordable resources with compromising on quality.
So the onus is on you to look for items that are within your financial scope and are durable. You’ll find lots of these super cool deals on online liquidation marketplaces for auctions and clearance sales.
Use Free Tools
You should be using a lot of free tools when you’re just starting your business. Some companies offer their free tools for only a limited period of time while some allow you to use only part of the software for free.
Whatever the options are, you’d still be able to save money until you’re ready to upgrade to the premium plan.
According to Nick Taranto, every small business needs a startup toolbox for efficiency – especially when growing rapidly. These free tools will help them to manage, document, sell – and keep them sane. You should also check around and see the tools that can supercharge your business.
Personally, some software owners have approached me to help them test their new software and share feedback. When I agreed to do it, I got direct access to use the software for a period.
Although in some cases, this access is usually never revoked. Meaning that you get lifetime access to test the software and continue using it even after the beta testing stage.
If you position yourself as an expert in a field, you may often get such requests especially if the owners feel that your review will help them. So look out for these opportunities and use them to lower your overhead expenses.
Only Hire Employees That Are Critical to Your Growth
You do not need a large team when you’re just starting out. What you need, instead, are a few trusted experts that are critical to the growth of your business. Why? Because the larger the team, the bigger the problems.
It gets to a point when you’ll begin to fancy the idea of hiring more staff. This happens when your business starts showing some propensity to make money.
From experience, this may not be a valid reason to bring in more staff. You should at least break even or make a steady and progressive profit before thinking of expanding.
A large team is not something to fancy if it is not needed. A small but effective team will help you get the same amount of results if they’re well trained.
It’s advisable to hire people who are all-rounders. A good example is a content marketer who can write blog posts and sales copies, run Facebook ads, and design landing pages. This is more cost-effective than hiring different people for each of these tasks.
Remember, your aim is to reduce costs and do business with a lean budget.
Outsource Non-Essential Tasks
Outsourcing is one of the best things to happen to businesses. It is a standard business practice where companies hire professionals (mostly freelancers) to carry out services that are normally performed by in-house employees.
Xenios Thrasyvoulou, the founder of SuperTasker and PeoplePerHour, suggests that you could save up to 30 percent every time you hire a freelancer.
The primary aim of outsourcing is to reduce overhead costs. But apart from cutting down costs and saving more money, outsourcing has other benefits that boil down to helping you get more for less.
These benefits include access to skilled personnel, better risk management, increased in-house efficiency, all-round availability, ability to focus on core business activities, and staffing flexibility.
Organizations that are on a shoestring budget should outsource roles that are not critical to their businesses more often. For some businesses, roles that are not directly involved with the money-making process are not critical.
Other people have their own yardstick for determining what’s critical to their business operations. The bottom line is that you should not make the mistake of overhiring, for it will hurt your finances.
Have a Budget
If you want to save money while running your business, you must have a budget. The purpose of a budget is to help you achieve your long-term financial goals. A budget also assists in building your savings and financial self-discipline, among other benefits.
It is not enough to have a budget; the most important thing is to stick to your budget. And you won’t be able to do that if you lack self-discipline. So it’s like a circle. Having a budget builds self-discipline and self-discipline helps you stick to your budget.
One of the things that help you stay within your budget is not paying yourself at first if you can afford not to. If you must pay yourself anything at all, it has to be a small wage. This is one of the sacrifices you’ll make until your business has gained enough ground to stand on its own.
Lack of startup funds is one of the biggest challenges among aspiring entrepreneurs. But now that you’ve read this article, the issue of not having a huge startup capital should not hold you back.
Because you’ve just learned 7 of the best strategies you can use to run a business on a lean budget.
Although there are lots of other ways to reduce the cost of running a business, the practicable tips shared herein will just be enough for you to run your business successfully even if you don’t have the necessary funds.
It doesn’t matter if you’re a solopreneur or you have team members, these strategies will work for you as long as you’re focused on your end goal – success.
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