Launching a startup is expensive. Obviously.
Fortunately, there are plenty of easy ways to save money at your startup.
Sure, you can skip office parties and ignore water cooler refills for the first few months. But there are other easy ways to save money.
An Hour With Ben Graham
This interview took place on March 6 1976. At the time, a struggling insurer, Government Employees Insurance Company (GEICO) was making headlines as it teetered on the brink of bankruptcy. Ben Graham understood the opportunity GEICO offered, and that’s where the interview began. Ben Graham and his partners had, at one time, been significant shareholders Read More
Today, we’re highlighting the best ways to save money on your startup costs in 2021.
Remote work isn’t an option for all startups. However, working remotely is an easy and effective way to save money at any business.
Remote work is more fashionable than ever. It’s no longer “weird” for a company to work remotely. Clients won’t be shocked when you tell them you work remotely. It doesn’t make your company look unprofessional: it makes your company look smart.
Let your employees work from home. If necessary, meet in-person (safely) at a weekly or monthly lunch. Working from home can help startups save thousands in the early days with few downsides.
It’s easier to hire an international worker than ever. If your office is already working remotely, then hiring an international worker shouldn’t disrupt your workflow.
A few decades ago, companies needed to hire local talent. Your employees needed to live nearby because they needed to visit the office every day.
Today, that’s no longer the case. Talent is distributed across the country and around the world. As long as someone has internet, they can seamlessly integrate into your company.
Whether you’re looking for the best talent – or the cheapest talent – your startup can easily hire a remote worker and reap cost-saving benefits.
Outsource work to freelancers whenever possible. As a startup, you can find plenty of cheap talent in other parts of the world willing to work at a fraction of the cost of a local.
Take Advantage of Small Business Tax Deductions
Small businesses can take advantage of plenty of tax deductions. Unfortunately, many small businesses ignore tax deductions.
Some of the things small businesses can deduct include:
- Marketing and advertising costs
- Utilities and other overhead expenses (even if you’re working from home)
- Any costs associated with launching or operating your business
- Travel expenses, including transportation and lodging costs (say, if attending a conference or visiting a client)
Hire a good accountant at your startup. Or, better yet, outsource accounting to a reputable third party. Any good accountant knows the best tax deductions for small businesses.
Find Commercial Auto Insurance
If you use your vehicle for any work purposes, then you cannot use your personal auto insurance policy to cover work trips.
A personal auto insurance policy will not cover any claims made while driving for work purposes.
That’s why your business needs a commercial auto insurance policy. A commercial auto insurance policy covers a fleet of vehicles. It can also cover employees’ personal vehicles when they are driven for work.
As a startup, buy the cheapest commercial auto insurance policy possible. All insurance companies offer bare minimum liability plans. These plans let you meet minimum insurance requirements in your state without spending a fortune.
Insurance is crucial for legal reasons. However, it’s unlikely your startup will need to make a significant claim in its early days.
Even in a worst case scenario situation, your business has limited assets to seize. If your employee causes a serious accident while driving for work reasons, then your startup has few assets to seize in a lawsuit or claim.
Start with a cheap commercial auto insurance plan, then adjust coverage as revenue grows.
Negotiate All Business Costs
When dealing with other businesses, make sure to negotiate everything.
Saving a few pennies per unit may not make a difference to a larger corporation, but it makes a significant difference to a startup.
Consider bartering. Some businesses – especially fellow startups – are willing to barter. Instead of paying cash for a service, you provide services to one another.
Whether buying hardware, software, services, office space, or products to improve your business, make sure you negotiate to minimize costs as much as possible.
Grow Intelligently and Expand Slowly
Most startups fail. Many startups fail because they tried to do too many things too quickly.
Make sure your business sets realistic, achievable goals. Many business owners try to accomplish all of their goals as quickly as possible.
They try to launch too many products and services, for example. Instead of doing one thing really well, they do ten things poorly.
Buy Used Equipment
As a startup, you’re not in a position to buy fancy, new equipment for your office. That’s a luxury for larger, more established businesses.
When larger businesses expand, they buy new equipment, then sell their old equipment to startups like you.
Take advantage of this lifecycle of office equipment. Look for used office equipment in your area. You may be surprised by the bargains you can get – with limited downsides.
Use Open Source Software
Decades ago, proprietary software built barriers between big tech companies and startups like you.
Today, big tech companies continue to use proprietary software to dominate smaller competitors. However, startups also have plenty of open source options.
Take advantage of open source software in your field. Even the most obscure fields have open source software available. Enterprise software is expensive. Open source software is not.
With a little hard work – and a lot of shopping around – you can minimize costs and maximize profit during your startup’s bootstrapping phase.