Starting a business is a heady endeavor, with many associated costs. Once your business is launched, there are ongoing costs to consider at every turn, too.
When launching and running a business, there are many ways to operate in a frugal and sustainable way. Conserving resources has multiple benefits for the business and the environment.
A frugal, sustainable approach to business operations allows for the conservation of resources, the support of environmental initiatives and preservation of capital.
By committing to such an approach, business owners can protect their investments and stretch dollars to have the greatest impact.
When you’re looking to launch a business with a frugal mindset, here are some tips to help you succeed.
1. Get Creative about Space
Real estate is a major expense for any startup business. Whether you lease space or build your own, the expenses can be considerable.
However, the pandemic and economic downturn have created a glut of office space. Property owners are likely willing to cut a deal on rent, giving you lots of room for your operation to grow.
If you do not need a public-facing storefront, you can get even more creative. You can approach existing businesses to see if they have room in which to rent some space.
Other options include joint working spaces, many of which come with accessible conference rooms, receptionists, and coffee. When you’re just starting out and need a small space, these creative options allow you to save on rental costs and avoid spending money on space you don’t yet need.
2. Use Free Apps
Software is necessary in nearly every aspect of your business. Fortunately, software does not need to be overly expensive. There are many free apps that can help you run your business, including:
- Canva. This popular app can help with your marketing, offering tools that help you create great graphics that can be used as logos, posters, thumbnails, ads, pins and banners.
- WhatsApp Business. This version of the popular messaging app has many great features for small businesses, including creating a business profile, highlighting your products and checking out via the app, automating replies, and integrating with Facebook Shops.
- PayPal Business. If you use PayPal business, you can use the free app to distribute invoices and manage transactions via your phone. You can also access sales reports, giving you a quick view of your customers from your phone.
- CashBook. When you’re new to your business, you’ll need basic bookkeeping functions. With CashBook (for Android), you can track income and expenses, track cash flow and manage your balances, track personal expenses, budget, organize and categorize payments and payment types.
- Square POS and Payment. Square POS is a point-of-sale system that lets you manage transactions in your shop and store or externally. You can use Square to accept all kinds of payment types, including credit cards, contactless cards, cash, chip cards and mobile apps. You can also track inventory, issue discounts, accept orders, collect customer information, manage multiple shops, and analyze reports.
- Adobe Scan. Keeping track of receipts can be daunting. With Adobe Scan, you can scan each receipt you receive immediately. It can also be used to scan documents, business cards, photos or other materials, saving you the stress of trying to track and manage paper.
3. Purchase Used Furniture and Furnishings
The costs of outfitting an office can be surprisingly high. There are many ways to save on these costs, especially for startup businesses. There are many businesses that focus on salvaging and selling used office furnishings, including desks, office chairs, conference tables, filing cabinets, lobby furniture and other critical needs for a new space.
The prices for these items are often a fraction of what they would cost you at retail. You can also often find used office furniture at thrift shops and similar stores like Goodwill or Savers.
Another option is to rent office furniture. That’s a good way to reduce the initial cash outlay and to try out different furniture types.
4. Reuse Shipping Supplies
It’s very likely that your business (and home) receives many boxes every week from Amazon and other retailers. These boxes are a great resource and can be reused. Packing labels can be easily removed, leaving boxes in good condition to be used again when you’re shipping out your own products.
You can also reuse the packing materials – including plastic air-filled packing and paper used to cushion the blow of shipping.
If you’re shipping via the U.S. Postal Service, you can receive free shipping boxes and envelopes too. Collectively, using and reusing these items helps to save money and reduce the impact on landfills.
5. Leverage Deal Sites and Other Discounts
It may seem strange to include Groupon in your business finance strategy, but doing so makes a lot of sense. Groupon, and other sites like LivingSocial, offer daily and ongoing deals that can greatly reduce the price of different products and services that are critical to your business operations.
There’s no need to pay full price for these things if you could save some money by leveraging coupons.
Similarly, Amazon and other online retailers regularly offer daily deals. You can also set up alerts for price changes on key products to know when there’s a good deal offered.
There are sites that specifically focus on offering discounted products for businesses and can save you lots of cash.
Other ways to save cash in ordering is to use credit cards that offer points or cash back offers and signing up for customer clubs at your favorite retailers.
6. Do Your Own Research
When you’re looking to figure out key data for your business, doing it yourself is a smart, frugal option. If you’re thinking of a physical location, spend some time parked on the street and track foot traffic to different shops in the same vicinity.
There are also tremendous free online resources with insights about demographic segments and their inclinations to give and how they behave as consumers. Government websites have a host of information, often sorted by geographic region, letting you hone in on your location and target audience.
7. Consider Location and Startup Costs
The location where you decide to establish your business is of paramount importance, with each state presenting its unique set of considerations and costs. For example, starting a Michigan LLC may have different financial implications compared to starting an Ohio LLC. The expenses to launch and sustain a business can significantly differ from state to state, such as between Michigan and Ohio. Being aware of these potential costs is crucial in making an informed financial decision about your operation’s location.
If you’re organizing your business as a limited liability company (LLC), you’ll need to pay initial filing fees and ongoing annual fees. The LLC is one of the most popular business structures, given its advantageous tax and liability rules.
The filing fees vary greatly from state to state. Here is a look at some of the state-by-state initial fees and annual fees:
- California. FREE initial fee through June 30, 2023, then $70. Annual fees of $800 every year and $20 every other year
- Illinois. $150 initial fee, $75 annual fee
- $500 initial fee, $500 annual fee
- New Jersey. $125 initial fee, $75 annual fee
- New York. $200 initial fee, $9 every two years
- Texas. $300 initial fee, $0 annual fee
- Washington. $200 initial fee, $60 annual fee
As you can see, the rates vary greatly from state to state. Understanding those fees and how to best structure your business is one of many ways to remain frugal and sustainable in your business operations.
There are many great ways to start a business while saving money and acting responsibly. A few commitments to frugal spending and a clear understanding of startup costs can help you start your business in the best possible position for success.