Surprisingly, 80 percent of new businesses fail before reaching their two-year anniversary. And the reason they do so is simple: their owners run out of capital to reinvest into the business. On average, it takes three years for a new business to start turning over a reliable profit. During this time, it is up to you, the business owner, to keep putting money into the business. If you fail to save enough to get your business through the first few years or if you blow through your startup capital too fast, you may set yourself up for failure. Following are a few ways you can save on startup costs so you will have more money during your first few years of operation.
Don't go right out and purchase a building or a bunch of expensive equipment until you know your business is going to be successful. Instead, look into leasing or renting everything you need. While you can lease a building, keep in mind that you can also rent a single office in an office building or even co-rent an office with one or more other companies. Co-renting costs approximately $50 to $200 per month, whereas the rent for a commercial building can be quite high. When you co-rent a space, you also have access to office equipment, which means that you won't have to purchase or rent anything.
Don't spend a lot of money on marketing materials right off the bat. When you first start out, you don't really know what's going to work for your business. If you purchase marketing materials in bulk, you may end up with a lot of things, such as brochures and business cards, that you can't use after you change tactics. Always order materials in small batches so you can save initial startup costs and cut back on waste.
Utilize Local Resources
Always take advantage of local resources, such as business incubators and college business development programs instead of hiring a consultant, which can be costly. Doing so will also put you into contact with other business owners as well. Having a group of people that you can bounce ideas off of is invaluable during the first few years of your businesses.
As you can see, there are several ways you can save money when starting up a new business. The key is to spend money in moderation. It's easy to get excited and go all out, purchasing the best of everything, when you first start a business. However, you should practice restraint. Purchase only what you must and rent what you can to save as much money as possible.