Starting a new business is both exciting and stressful. You’ll be eager to get your new company off the ground, but also worried about how you will manage all of the costs associated with getting your business off the ground. The costs of starting a small business are significant, but so are the potential benefits since these are factors that can help you create a successful business venture. When starting a new company, small businesses may find that they can save money in various areas like payroll, insurance, and even hiring practices. Here are ten ways that small businesses can reduce expenses associated with getting their company up and running.
Find the right location
Location is important when it comes to the cost of renting a business space. You might think that renting space at an office building would be ideal since the space is already set up and ready to go, but the truth is that it can be significantly more expensive than renting a warehouse or another type of facility.If you are not sure where to start looking, a good place to begin is by asking other small businesses in your area that they rent their space. Chances are that other business owners will have experience renting space and know the average rates.If you are hoping to keep your costs low, you can also consider renting a warehouse or another type of facility. However, keep in mind that you will need to bring in experts to retrofit the building and equip it with the necessary safety features.
Eliminate unnecessary office expenses
Office and administrative expenses can eat up a significant amount of your startup budget. There are many things that you will need to pay for, including supplies, insurance, and more.You can save money on these expenses by streamlining your office practices. For example, if you require all employees to work remotely, you can save thousands of dollars each year by eliminating the need for a large office space.Other ways to reduce expenses include finding suppliers who offer volume discounts and negotiating with insurance companies to get lower rates.Another way to save money is to hire employees who are skilled in areas where you do not need specialization. For example, if you are building computers, you may want to hire an information technology expert, but if you are building a website, you can hire someone who specializes in web design.
Streamline your employee benefits
One of the most common cost-cutting measures that small businesses implement is reducing employee benefits. You may decide to eliminate health care benefits or reduce the amount of money that you spend on them.When you cut benefits, you may also see an increase in employee productivity. This can be especially true when it comes to health care benefits since many employees find that they are more motivated to work when they are not worried about losing their health insurance.
Eliminate non-essential employees
You may want to consider eliminating non-essential employees in order to reduce your payroll costs. Nonessential employees include individuals who work in the office such as the cleaning staff, the IT technician, or the janitor.There are two ways in which you can save money by eliminating nonessential employees. First, you can reduce the amount you pay in payroll taxes. Second, you can negotiate a lower rate for services like cleaning, landscaping, and computer repairs.
Hire an independent contractor
If you need a service, such as plumbing or electrical work, you can hire an independent contractor to do the job instead of hiring an employee. The IRS has a rule that allows employers to treat independent contractors as employees for payroll tax purposes, but there are ways to avoid this and save on payroll taxes.First, you need to determine if the contractor is an independent contractor or an employee. This can be tricky because there are several factors to consider, including the amount of time that the contractor works, how they are paid, and the type of work they do. If you decide to hire an independent contractor, you can save money by paying them on a per job basis and not providing benefits.
Cash-flow management
Another way to reduce expenses while you are starting up your business is to reduce the amount of cash that you need. You can do this by finding partners and investors who will commit to a smaller amount than you are currently asking for.You can also create your own crowdfunding campaign where you ask your friends and family members to get involved and donate small amounts of money. You can also set up a payment plan where you pay off your creditors over time.This is a good option for new entrepreneurs who do not have a lot of money saved up. It is a good idea to get a business loan, but you also have to make sure that you repay the loan as quickly as possible.
Conclusion
When starting a new business, there are many expenses to consider, including office and administrative expenses, employee benefits, and payroll taxes. You can reduce expenses by finding the right location, streamlining your employee benefits, hiring an independent contractor, and reducing cash-flow management.