Most new businesses fail within their first two years, and the main reason is due to insufficient capital. Even if your product has a strong customer demand, you can still wind up having to close your business if you don’t have access to enough money to keep you solvent.
It is often difficult to know exactly how much money a startup will need, so to be on the safe side, there are a few steps you can take to minimize your initial costs and increase your startup’s revenue.
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Start your business at home
This is a huge money savings move, especially in a sluggish economy. By working out of your home, you can save on the expense of renting an office. Of course, once you start hiring employees, running your business out of your home may become impractical; however, until you’re at that point, it may make sense to work from home. In some cases, part of your rent or mortgage may be written off as a business expense.
Start your business part-time
You know the old saying, “Don’t quit your day job”. Oftentimes the pressure of trying to run a business is extremely taxing and failure is too great of a risk. By keeping your job and starting your part-time business, you will be able to maintain a steady income stream which can give your startup a better chance of succeeding.
Rent a storage facility
This is a particularly good way to save on the costs of storing raw materials, inventory or equipment. For those running a business out of their home, this will save a lot of space at home and allow you to develop a more efficient working environment. For those working a retail business out of their home, storage is often a road block to success.
Rent instead of buying
Depending upon the nature of your new business, it may make more financial sense to rent instead of buying. Paying cash for equipment means increasing your start-up costs, purchasing it on credit means you’re saddling your new business with debt. It is better to rent your office equipment as often as you can, so you are paying as you go.
Outsource payroll services
There are many good companies that allow a business, large or small, to have their payroll done online. Data is uploaded, and everything is done for the business owner. Payroll taxes are computed as well as other deductions. The money is transferred directly to the employee’s bank account.
Accept credit cards
Studies have shown that when a business offers credit cards as a payment option that customers tend to spend more money. Therefore, make sure you sign up for a merchant account so you can accept credit cards securely. Although you will have to pay fees for each transaction, you will generally process more transactions when you accept credit cards and the average transaction will be higher.
Use VoIP for your phone service
This can be a great money saver for a small business with several employees that are on the phone regularly. All phone numbers and phone calls are routed through an Internet connection to a phone service provider. They take care of all phone maintenance and your system can be expanded easily as your company grows. Employees will have the same speed and quality of any local phone service, but as a business owner you will be paying less for the phone service.