Where Can You Save Money When Starting a Business?

When you are starting a new business, keeping a close eye on costs is vital and saving money where possible can be the difference between success in the first year or not.

After all, it is very easy to get carried away in year one with a new business, with lots of excitement and the desire to throw money at different things such as marketing, staff, consulting, office rent and more.

We draw on the experience from different startup founders to get an insight into how you can save money for your business.

Don't be afraid to outsource

Whenever you hire employees, you need to factor in the cost - beyond their salary, there are many additional costs to consider.

When starting a business, there will inevitably be people that you need on hand to help make your business dreams a reality. However, at the start, you will lack the resources needed to have a big team.

"As a business founder, a lot of your time and money can be spent on managing your staff," explains Daniel Tannenbaum, the founder of Pheabs, a finance startup.

"Whilst you have salaries, you have associated costs such as national insurance, pension, an office space, computer and also spending time training them or giving them tasks - and this can be costly when your time is valuable."

"As such, you may find some important cost savings early by using sub-contractors for maybe 1, 2 or 3 days per week and paying a fixed day rate,

"Outsourcing can be a great way of saving money and making sure that the jobs are done by experts. With everything from IT support and bookkeeping to digital marketing and design available for outsourcing, you can negate the need for paying more salaries or investing in in-house training and outsource work to professionals. This is a great way to only pay for services as and when you need them."

"Just make sure that you don't use big shot consultants, because paying day rates of £500 or £1,000 will quickly drain your account."

Try to negotiate

If you rely on stock, materials and production, do not be afraid to negotiate prices with your suppliers and vendors. You can always try to shop around for a better deal. Whether it is speaking to your landlords, reevaluating any contracts with subscription services or speaking to your suppliers about the price of goods, you may be overpaying on essential business services.

Make sure to do your research as much as possible and see what offers are available. Compare and contrast different options so that you are in a better position to negotiate. That way you can talk to your existing vendors knowing what your options are and being able to walk away if you're being ripped off.

Embrace remote working

"Remote working has become a necessity in recent years due to the pandemic, but companies are beginning to realise its many benefits," explains Richard Allan of funding platform, Capital Bean.

"As well as being a perceived perk for many employees who appreciate the greater work-life balance and lack of commute, it has also proven to be beneficial for companies as a whole."

"One of the greatest benefits for companies is that remote working is far cheaper for them as they do not need to pay for a physical office space."

"It also questions whether you need local staff, since paying people to work remotely in quieter or rural areas is going to be cheaper to reflect the cost of living. Rather than hiring expensive staff in London, you could find more affordable and equally talented people who will work remotely from Hertfordshire, Buckinghamshire or beyond."

Hire potential over experience

It can be tempting to hire employees who have years of experience in the industry. However, if you are willing to spend more time on training, you can save a great deal of money. Looking for smart but inexperienced people who are eager to learn can be a great business move.

Not only are you giving people their first foray into the business world, you are hiring people who are motivated to prove themselves and get the job done. Unlike people with years of experience, newer workers won't have nearly the same salary expectations.

Make time at work as productive as possible

During work time, try to keep meetings as short as possible and make sure that you are only having meetings when necessary. Have the meeting of the goal clear before starting to keep meetings as focused as possible.

Doing this will free up more time for employees to concentrate on their job tasks so that they can boost their productivity and, in turn, increase the overall productivity of the company. All of this will prevent wasted time and save money in the long term.