Instead of asking for growth capital from friends, banks, investors, or internet-pools of armchair-angels, consider the alternative: cutting your business costs. Cutting your costs means you need less funding to move your business forward and it means you’re more likely to reach your financial goals with the funding you do solicit.
There are many ways to slim down your costs: some of the most effective avenues are leasing rather than purchasing necessary equipment, buying used furniture instead of new, and avoiding the high costs of office space through the utilisation of a virtual office.
Rent or lease your equipment
One of the largest costs your business is generating will be purchasing all the equipment necessary for you to operate. This equipment can range from specialized machinery, to vehicles, computers and mobile devices.
- Renting or leasing equipment helps ease your financial load by spreading out the cost of the equipment over the course of several months to a year. This gives you time to get your business up and running before you’re responsible for the full payment; and
- Since the ownership of the items retains with the lessor, they are usually responsible for maintenance, upkeep, and repairs. If a machine breaks down, you don’t have to pay out of pocket to fix it, so you never have any financial surprises.
Another way to save money in your quest for funds is to buy used, rather than new, equipment. Although it would be great to have all brand-new equipment for your business, it’s more likely to become successful and sustainable if it requires less up-front cash.
- Search online, check the classifieds, and ask other businesses in your niche in order to find the equipment you need at a lower cost;
- Pre-owned commercial vehicles cost less than new ones. You can gain access to extended warrantees and other new car perks if you buy from a certified used car dealer; and
- Office furniture is another place where buying used instead of new can be profitable. Ask your furniture supplier for pricing on floor and showroom models. Keep an eye out for businesses that are remodeling or upgrading and thus have a lot of used office furniture that they need to sell off fast.
Create a virtual office
Between rent, utilities, and furniture, the cost of office space can eat up a significant chunk of your capital, particularly for a fast-growing business. Instead of going through the rigmarole of renting and outfitting a commercial space, consider going virtual instead.
A virtual office can be maintained completely online and in the cloud, so the only office space your team need is a desk at home or a table at the local coffee shop.
- Virtual assistants can take care of many regular office tasks from a distance. They can answer your calls, sort your emails, and perform customer service all remotely; and
- Online cloud-based software can make it easy for you to share files, information, and data amongst your employees. Since most cloud software charges a monthly fee for the service, your up-front software costs are reduced.
There are many ways to go about finding funding for your business, from the more traditional loan methods to new crowdsourcing practices on the internet. Saving $10,000 on a used vehicle instead of a new one is the equivalent of raising $10,000 from traditional funding sources only this way, you don’t have to pay it back.
Megan Webb-Morgan is a web content writer for ResourceNation. She writes about small business, focusing on topics such as business sales.