Congratulations on starting a new business! You finally step closer to being your own boss and helping the economy by creating new job opportunities. However, it is worth keeping in mind that: Startups can be extremely demanding and challenging. Especially with today’s persisting global pandemic, the economy is hitting a new low – leaving startups with little financial assistance. CBInsights recorded approximately 208 startups failing due to financial fraud, lawsuits, and global pandemic. Most of the startups that failed financially were due to money management, in which money becomes the most crucial aspects of early-stage startups.
If there are any ways to cut down expenses and save money for your business, this could save your company from collapsing early. Money management in startups is as vital as the team itself – keeping an eye on your financial reports will prevent financial issues from sneaking up on you and your business.
In this article, we share some ways to save budget for early startups. What are they? Read on…
1. Hold fewer meetings
You might think that meetings cannot be costly. The truth is meetings can take a toll on productivity if not used wisely. By holding fewer meetings and doing meetings in smaller groups, work can be done more efficiently.
2. Move back home
Persuade your parents to let you live at their home, this could save money for living costs. Tell your parents your ideas and hope they will be supportive of it. Either way, you can ask a friend or sibling to rent you a room with a smaller budget.
3. Be smart with your marketing
Traditional marketing requires a huge amount of money and investment. You need to film your products or services, publish them in tabloid or newspaper, create a billboard, etc. Advertising on print media might be effective but extremely costly and environmentally unfriendly. So, use the Internet and do social media marketing. Keep your budget at low-cost but effective to reach your potential customers. If you are not good at marketing, find a partner who is experienced but is not looking for a paycheck. You can be partnering with them and sharing profits once your business scales up.
4. Hire freelancers
Hiring full-time employees means having less money to develop your business model as you need to pay them up monthly or weekly, depending on the agreements. On the contrary, a freelancer can be found anywhere nowadays and can be hired only when needed. You don’t need to pay them monthly as you should with full-time employees. If you find yourself constantly handling trivial but crucial tasks and lacking time to focus on business development, freelancers would be a great option.
5. Monitor your budget
Startups are generally keeping a financial statement to track their budget. There are 4 common financial statements to help you: a startup budget or cash flow statement, a startup cost worksheet, a pro forma profit and loss statement, and a pro balance sheet. Each of these statements has its own functions described as follows:
- Startup budget is a projected cash flow statement with little more guesswork. Some key information on this budget statement are: what products or services you are selling, including prices and estimated values and key drivers for expenses, like how many employees you will need and your marketing initiatives.
- Cost worksheet answers the question ‘what do you need the money for’. It shows all the purchases you will need to make in order to open doors for business. What you need to include here are: facilities, office equipment, supplies and advertising materials, fees to set up your business website and email, and legal fees licenses and permits.
- Profit and loss statement shows your business activity over a specific period of time, like a month, a year, or quarter a year. To create this statement, you need to list all your sources to get your gross income over time. Then, list all expenses for the same time. This statement helps you monitor your income (profit and loss) and how much tax you have to pay.
- Balance sheet shows the value of the assets you have purchased for the startup, how much you owe to lenders and other creditors, and any initial investments you have made to get started.
6. Use barter
You could trade products and services for someone else’s instead of paying cash. Many influencers have made this possible – they trade their services to advertise products, then the company they collaborate with will give them free products or services. Make sure barter agreements are documented and keep track of barter – you might need to report it on your business taxes later.
7. Recycle, reuse, and reduce
Instead of printing on one side of a project paper, you can print on both sides. You can also buy energy-efficient office equipment, buy larger ink cartridges that will not damage your printer such as XL ink cartridges. Be creative to make your office fun and budget-friendly.
Read also: You Should Invest Startup Budget in These 5 Technologies