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New Small Business Tip: Shoestring!

March 17, 2011 1 comment

This was originally posted on the TN Tax Accounting blog.

Starting a new business can be expensive. If this is your first business there will be an urge to spend money everywhere. It’s only natural because you’ve heard many times “it takes money to earn money”. Well I’m here to say that doesn’t mean you keep spending for no reason, especially when starting out. This is time when you need to keep on a shoestring budget.

It is far more wise and economic to start your business “on the cheap”. If the business can be started from your home that is a great way to save money. If not maybe someone you know has an office or retail space where they are willing to give you some space. Even if you pay rent to that person, it will likely be cheaper than leasing a space of your own.

Some other possible ways to save money up front:

  • Don’t hire employees until you have enough work for them to keep busy! Until that time you can hire temps or other contractor types.
  • Don’t over-buy office and other supplies! The urge will be there to get fully stocked. But remember every dollar you spend on supplies takes away from money you can spend elsewhere!
  • Don’t over-spend on marketing. Targeted marketing will get a better return on investment than placing ads in every medium possible. Look at what your competitors are doing and start from there.
  • Give out business cards! Business cards are cheap and they work. Give them out to everyone.
  • Pass costs on to your customers. If you are just starting to get customers this is important. The urge will be there to eat a lot of costs to get/retain customers. Unfortunately this will also set a false expectation and may cost you a lot of money later on when you are stuck under-priced.
  • Which leads to my final tip: DON”T UNDER-PRICE!! Setting a price for your goods or services is always hard. Do some research and see what your competitors are charging. If you believe your product is of superior quality then you can charge above the average rate. If you feel you have a competitive advantage and can provide cheaper prices then go below the average.

There are other ways to bootstrap your finances when starting a small business. The main key however is to make sure you only spend money when necessary.

 

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