Most businesses spend their early days with extremely tight purse strings. Even after receiving funding, startups might want to do everything they can to save costs anywhere they can. Not only could this display of resourcefulness help them when they apply for funding, but it can also be a necessity.
Small business platform Xero found that the average UK small business faces periods totalling more than four months each year where monthly expenses exceed revenues. 23% of them experienced such hardships for more than six months each year. This guide helps detail some thrifty ways that startups can save money.
Use free resources
A lot of software tools have perfectly serviceable free equivalents. Using these free variants can save startups hundreds of pounds each year.
Another good choice could be to hop between free trials. Lots of software products have tens of competitors offering free trials of virtually the same thing. You can stretch your free-trial-hopping period for as long as there are trials to be claimed.
This can also pay off in the long run because it means you have tested every offering, so when you have the budget to pay for one, you will be able to make an informed choice. You might even find that the free versions are perfectly serviceable.
Ask for discounts
This tip applies to office space, software, services, and even materials. You will likely be told ‘no’ many times, but there is never any harm in asking.
Sometimes discounts exist that you might never have learned about without asking. Other times, sellers and landlords might just be amenable to giving you a discount for whatever reason – perhaps you seem like a good Tennant, or they want to form a long-term business relationship with you.
Apply for grants
In the UK, there are plenty of grants available for small businesses. This includes grants for businesses that are environmentally friendly, or who focus on a specific climate problem.
You should check whether your business is eligible for a grant, as this is essentially ‘free money. Although you will likely not get as much money from a grant as you would from an investor, you at least get to keep all your profits.
Have access to cash when you need it
Getting funding is common for startups and some founders feel that they need to raise large sums of money, however, they may be giving away equity or shares in the process.
There are some forms of credit which are expensive such as unsecured loans or bad credit loans, but there are some ways to support your startup which are very cost-effective. Consider using a 0% credit card for a 24-month introductory period.
Not only will this give you 30 days to pay off any expenses, but also be free if you can pay it off on time. There are other products such as invoice finance and secured loans against assets which can start from as little as 3% APR.
Share an office
Sharing an office means you can avoid paying for amenities and utilities. You can even get a better rate on rent if you share an office, and have some flexibility when it comes to how much space you can use each day.
It also gives you a great opportunity to network with people you might never have otherwise met. If you choose an office space in a neighbourhood famous for housing businesses in your industry, you will likely meet some great connections.
If you are struggling to find enough money to launch your product, you can run a presale and allow customers to pre-order your product. This works great when you already have a pre-established base of people who might want to buy from you.
This is also a great way to get an idea of which products are needed in which quantities. If more people are pre-ordering a specific product, this is valuable information.