How to Save Money on Your Small Business Start-up Costs in 2022

Most of us who start a business have a passion for the niche and, of course, profit.

While passion is personal, the costs of starting a business are generally universal.

At this early stage of your business, you must plan your outgoings meticulously, so you don’t run out of funds before you start making a profit.

And be realistic about how quickly you`ll engage and convert your target audience and generate an income.

With that in mind, we’ve put together a collection of proven tips to save you money on your small business start-up costs.

1. Adopt The MVP Approach

Often new business owners make the mistake of thinking they need the very best tools and equipment, and their products and services must be perfect from day one.

But it`s not true.

Let’s look at this in two parts:

Equipment:

If you’re starting a physical business such as a bakery, construction business, or café, your immediate equipment needs can run into the tens of thousands, especially if you buy new.

You can vastly reduce that bill by using good quality well maintained second-hand equipment.

Many online and local companies specialize in selling repossessed or no longer required equipment relative to your niches, such as kitchen appliances, construction equipment, and commercial furniture.

Products and services:

MVP stands for “minimal viable product,” it`s a product or service a company can bring to market that adequately meets the needs of a target audience at an affordable price.

It doesn’t mean using an inferior product or service because negative reviews will destroy your reputation before you`ve established your business.

Your MVP goal is to provide a competitive product/service and enter the market as quickly as possible to generate income.

After all, you’re a new business, so you need a selling point, and at first, a lower price might be your only option.

Reducing your outgoings by buying second-hand and using an MVP are excellent ways of lowering your initial costs, but what about those ongoing ones?

I’ll explain next:

2. Always minimize your overhead expenses

Most overhead expenses are unavoidable and ongoing and eat into your profit margin because all too often, you can’t associate them with your unit or service price.

For example:

You’re providing a product/service at a competitive price.

The higher your overheads, the more significant the impact on your bottom line. In other words, you don`t make as much profit on each sale.

One of the best ways to ensure you are competitive and constantly turn a profit is to reduce those overheads.

Now’s the time to be ruthlessly realistic about your start-up business needs. Don`t sign up for 12- or 24-month contracts until you`re sure they`ll support your business goal.

Another way to minimize your initial outgoings and increase profits is to be smart with your branding; you’ll be amazed at what’s achievable for a very affordable price.

3. Be smart with your branding

Did you know that people buy brands, not products or services?

For example, if you need a new phone, software tool, or local construction company, do you choose the cheapest on offer?

Or one that looks good but has zero reviews?

I doubt it.

Most people choose reputation and reliability first, and that’s where branding comes into play.

We live in a visual-driven world, and that gives your start-up a real opportunity to engage with your target audience and land those first precious customers.

But many new business owners don’t know where to start or think branding is no more than a logo, a sign, and fancy stationery. While those are important, today’s consumers look for far more when choosing a company to do business with.

The good news is you don’t need a degree in branding or a vast budget to create a professional business image. All you need are Ai branding tools like Tailor Brands make branding quick, easy, and affordable.

These advanced tools can create logos, branded merchandise, stationery, provide domains, and even design your entire social media branded campaign. Still, more importantly, they help you create a consistent brand look and presence, and you only pay when you’re happy with the results!

4. Negotiate with vendors for the best deal

Your ability to negotiate a better deal with vendors is often determined by your niche, products, end retail price, and where you’re buying them.

And when you’re new, and orders are small, vendors generally try and charge you the highest rate. While that might sound unfair, it’s an unfortunate reality.

But prices are always negotiable:

Vendors like you are in business to make sales, and it’s a tough market for everyone.

Most people buying stock are familiar with MOQs (minimum order quantities). It’s the smallest amount of inventory a vendor will sell of a specific product, and the lower the MOQ, the higher the unit price.

One way around this is to say the first order is to test the market, and the next will be larger, but you need the lower unit cost to test. You’d be surprised how often this works.

And it also applies to utilities and mobile phone contracts. When you call suppliers and tell them you’re leaving, it’s incredible how their service suddenly becomes cheaper!

5. Outsource where possible

My old dad was ahead of his time because he outsourced staff decades before it became the popular way of building a professional team.

He was a small-time property developer in high demand. I asked him on several occasions why he wouldn’t expand and employ a team full-time.

His reply, “why overextend and commit your cash flow to pay employee’s wages, insurance, and tax obligations when the futures are uncertain.”

Instead, he used subcontractors, and you can too by outsourcing.

Outsourcing contractors helps reduce your overheads, giving you that vital competitive advantage and increasing your all-important cash flow.

And it enables you to stay focused on your core mission by only paying for services when you need them.

And now it’s easier than ever!

Here’s where using the gig economy comes into play:

6. Use the gig economy to your advantage

We live in a gig economy.

And you can consistently leverage the myriad of experts who are available on platforms such as Fiverr, Upwork, and others to outsource non-core services and capabilities to support your business.

And the gig economy boom has lowered traditional prices due to the availability of professionals providing services from country’s where the average wage is lower than where you’re based.

But it also enables you to stabilize your company’s finances by only hiring people when you need them.

7. Employ eager, intelligent, inexperienced people

Regardless of your market, if you only hire people with the most experience, it’s going to be expensive.

And experience isn’t everything because recent graduates have the most up-to-date information, are eager to learn, and make their make on the world.

You can harness that enthusiasm by advertising to the less experienced generation and reducing your overheads by paying an entry-level salary.

This approach also allows you to train these receptive, eager minds to work your way.

Remember, you don`t need the best people; you need the right people.

Our last piece of advice on how to save money on your small business start-up costs is already at your fingertips, software tools, and apps!

Let’s look at those next:

8. Familiarize yourself with free tools and apps

More time and resources are at the top of every new business owner’s wish list.

And you now can increase both without having to bust your budget because there’s a plethora of free software tools and apps available to help your most modern business needs.

And the ones that aren’t free allow you to sign up for free trials so you can experiment and find what you need before investing.

Some popular free apps and tools that help ease the workload:

Freshbooks and Xerox offer accounting, payroll, and invoicing services perfect for start-ups, with 30-day free trials and plans as low as $9/month.
Burst allows you to browse a vast library and download free, high-resolution photos for your commercial use or website.
Social media management tools enable you to analyze your target audience and develop tailored marketing campaigns.

Conclusion

If you put the time in now and source the most affordable options, you’ll instantly reduce your monthly outgoings.

That helps you compete with your more established competitors.

And once you`ve found a foothold and are turning a profit, you’ll be in a position to upgrade.

But right now, think big and start small; your budget will love you for it.