Starting a business is expensive. Not only do you need to hire workers, buy equipment, and rent space, you also need to brand your business, market your products, and often build a website before you can start earning anything at all. This makes for a complicated situation for many young businesses.
While these costs seem fixed and monolithic, there are a few things you can do to keep your spending under control, and to ensure that costs don’t mount uncontrollably over time to sink your business before it even has a chance. As with most things, it’s far more effective to think ahead from the start than to wait for potential problems to become impossible to ignore.
Start marketing early
As an entrepreneur it’s tempting to focus your efforts on your products and your operations. This is a good instinct, since a business needs to be able to deliver value if it means to survive. However, it’s equally critical to ensure that your business actually has an informed market to reach out to when it does start producing and looking for ways to grow.
Sit down with a professional and hash out a basic marketing strategy to run while your business is still in its initial stages. The investment doesn’t have to be large, and the marketing campaign doesn’t need to be comprehensive. Rather, it should aim to lay the groundwork for future marketing efforts by establishing your brand as a member of your industry on relevant industry websites or publications, building an email list, or developing a following on social media. Doing any of these things requires a relatively small amount of sustained effort over the course of months. It’s very common for marketing agencies to be forced to spend a long time laying this groundwork before they can generate real results. That can then translate to a lot of lost potential revenue while your business sits around waiting for leads.
Getting these things done as soon as possible means you’ll be able to get rid of this lag time so that you’re ready to effectively generate leads with future marketing efforts much sooner, possibly as soon as your business is ready to accommodate them.
Don’t overestimate your growth
Businesses grow in spurts, and not all of that growth is permanent. Over time, business owners get a feel for when those growth spurts are going to occur, and can prepare for them ahead of time. Unfortunately startups who haven’t gone through these cycles before often make the mistake of interpreting a growth spurt as a long-term growth trend, and overreact. They go and get financing to purchase more equipment, hire more employees, and sometimes even move into a larger office on the expectation that demand will catch up to fill their new capacity very soon.
This is, of course, incredibly risky. If your business doesn’t actually experience the predicted growth, you could experience serious financial hardship that will impact your ability to operate and grow effectively in the future.
It’s important not to arbitrarily grow your operational capacities beyond what your revenues can currently sustain. By doing this, you’ll keep your business running sustainably without unnecessarily leveraging assets to finance wasteful spending. This not only saves money directly, it’ll also make it much easier to get the financing you need to expand your operations when a tangible growth opportunity does materialise.
Hire experienced workers
Most startups can’t afford to hire industry leaders and experts with decades of experience. Unfortunately, many entrepreneurs give up on hiring experts entirely, and bring on the most inexpensive and under-qualified workers they can find, usually fresh college graduates. That can be a big mistake. While these workers certainly cost the least in terms of wages, they aren’t actually the most cost effective solution.
Employees with just a few years of experience can bring far more to the table, while often still being available at fairly affordable rates. They don’t need to be taught the basics of their positions, they generally know how to stay on task, and they know how to interact with coworkers and clients to create a healthy and productive work environment. They’ll also be far less likely to make simple mistakes that could undermine customer confidence in your business.
This is a big deal for any startup, because it’ll impact the quality of your work, and your ability to retain clients in both the short and long term. Paying less for a worker isn’t worth the savings when you have to compensate for accelerated client turnover and potential damage to your startup’s reputation. Hiring additional marketing and sales staff and possibly a reputation management firm is going to be far more expensive than bringing on well qualified employees in the first place.
Most new businesses don’t make it through their first year, but if you plan ahead and think strategically, your business doesn’t have to become a statistic. If you’re looking for help and advice on how to help your business succeed financially, give us a call today to chat with one of our expert representatives.