Most new companies struggle within the first few years of operations. However, the most successful companies find ways to overcome these challenges and maintain positive revenue. Here are three ways to save costs when first starting a business. That way, your business can be one that succeeds.
Ditch Paper
This is a quick tip for saving costs that may seem insignificant, but it’s extremely effective for new and old businesses alike! Around 3 percent of your company’s yearly revenue goes toward printing, filing, and maintaining paper documents, such as contracts, invoices, and private information. Plus, the average office worker goes through 10,000 pieces in one year. Most importantly, recreating lost documents costs an average of $220, and it costs around $120 for the time spent searching for misplaced documents.
The solution? Ditch that paper! Use document-signing programs to make all invoices and contracts completely electronic. Investing in document-organizing software is far less expensive than dealing with physical paper. Plus, it reduces your company’s carbon footprint, boosting your overall reputation.
Outsource Responsibilities
Most small businesses lack the capability to make products in high volumes, let alone ship them through complex distribution infrastructures. As an owner, you could spend many months to years building up capital and eventually financing your own production plant. Or you could save the stress and make more money up front by getting into an agreement with a third-party manufacturer.
This form of partnership, known as contract manufacturing, places all production responsibilities on a different business that specializes in wholesale manufacturing (and sometimes drop-shipping distribution). This gives you more time to focus on other aspects of your company, like marketing and customer satisfaction. You can set up short-term contracts with third parties in case you require a new contract manufacturer down the line or can support in-house production.
Lease Expensive Equipment
Let’s say that you’re hesitant to enter into an agreement with a third party, or you have enough capital and infrastructure to attempt in-house production. Before you go and drop thousands of dollars on machines and tools, consider leasing the most expensive equipment you need.
The most commonly leased items include:
- Production/manufacturing equipment
- General heavy machinery
- HVAC systems
- Trucks and other large vehicles
- AV equipment
- Office furniture
- Telephone systems
- Hardware/software
This method of borrowing pricy items reduces financial and mental stress for yourself and others. Mainly, the business you lease from almost always covers the labor and cost of maintaining and upgrading equipment.
Use the simple ways to save costs when starting to ensure your new business hits the ground running. Along with all these tips, always ensure you’re getting the best deals with credit cards and banks, which are both known “money drainers” when done improperly.