Every year, there are more and more newly launched small and mid-sized businesses in the US. Most of them shut down before the end of their first year in business.
And most of those that make it through have committed and frugal owners. If you’re starting from the bottom, you need to be as disciplined and wise with money as it gets to keep afloat while moving forward.
We’ve done some research on the correlation between successful SMB owners and expenditure.
As a result, we’ve prepared the five vital frugality tips for new SMBs.
1.Home office instead of renting
First and foremost, keeping the assets that start pouring into your business under control is essential to keep moving.
In that light, be careful with every cent you spend on your business affairs. Try to prioritize your costs and investments to make sure you never spend all your monthly budget.
For instance, you don’t need to rent an office from day one unless you’ve already hired your first employees. If you’re starting off on your own, wait until you see how things are going. Isolate yourself from the rest of your family (if you don’t live alone) or go to a coworking spaces , for the beginning. Give yourself some time to calculate how much time you need to finish your daily tasks. Write down the total revenue at the end of the first month and you’ll know your budget for the following month. If you can pay the office rent without taking too much away from your revenues, go for it.
2.Saving on overhead expenses
Being your own boss brings numerous benefits. You can implement any idea that crosses your mind, choose the clients to work with, and set your own work hours. However, this is only a wish list, rather than realistic perception of entrepreneurship.
In reality, business owners need to cope with hundreds of regulations, deal with compliance, and cover various overhead expenses, from taxes and social contributions to utility bills.
The good thing is that you can save on all these things if you’re self-disciplined and well-organized.
When it comes to taxes and accounting, go through the vital operations with a local accountant. After that, choose the right accounting system for your business. Search for easy integration and linking to your bank accounts and other financial features you’re using.
As for utility bills, the tips shared in the first paragraph are applicable here, as well: don’t rent an office until it becomes a necessity. When you decide it’s time to work from the office, try to find an already furbished place. You won’t have to spend money on your own furniture and inventory. If possible, choose an office space with energy-efficient electronic devices. If you’re going to buy office equipment alone, bear in mind the energy industry trends and go for ecologically acceptable and efficient devices.
Finally, don’t spend money where it’s not essential for your business progress. Postpone any investments that don’t bring direct and immediate benefit to your business.
3.Freelancers instead of permanent workers
Let’s say that your initial business results are positive, and your clients are satisfied with your services/products. After such a good start, most new SMB owners would jump onto landing more projects and working with more clients. Consequently, they wouldn’t be able to do all the tasks alone, but they’d need to hire additional staff.
In that case, it’s still critical to say as disciplined with expenditure as it gets. If you sign too many permanent contracts and engage full-time workers, you’ll be spending a lot of money on their salaries and related taxes/contributions.
Instead of that, start working with freelancers. You can find top-rated professionals on Upwork and other freelance platforms. Tell them what you need and let them prove they can meet your demands. Some of these freelancers will become your long-term associates. When the time is right and the budget is full, you’ll appoint them your permanent, full-time employees.
4.Replace in-house storage with the cloud
Keeping business data on hard drives and portable storage devices is so 2000s. Modern SMB owners need to be aware of cloud-storage providers that replace traditional, in-house data storage.
When choosing the right cloud-service provider, learn more about their reputation and customers’ satisfaction with their services. Narrow down the list of potential providers and check them out on the Internet, such as Google Reviews. Read their LinkedIn and Facebook posts and read the customer feedback in comments.
Inquire about their security features and the locations of servers where they’ll keep your data. Find out more about their alternatives in the case of server downtime or hacker attacks. You should always be able to access your data, which need to be backed up.
5.Opt for SaaS instead of expensive licenses
Paying expensive annual licenses to use legal software is behind us. No, the alternative isn’t using illegal software. Today, business owners have SaaS (software-as-a-service) solutions at their disposal. It means that you can choose only a set or features or one single element and keep paying for it until you need it. When you don’t need it anymore, you stop paying the subscription and move on.
For instance, let’s say you need an accounting software tool as you’re starting your business. Since you don’t have too many clients and the revenues are low, you go for a basic package. However, if you agree more projects and your accounting needs increase, you simply upgrade to the next pricing tier that offers more services. Conversely, when you finish some projects or lose some clients, you downgrade to a less expensive tier.
Being a business owner today is both interesting and demanding. However, if you keep your budget under control and spend your business assets wisely, you’re more likely to succeed. The frugality tips shared above will help new SMB owners put a few cents aside every month and develop their ventures.
Author Byline: Liam Collins is a tech pundit and Web enthusiast working at TuiSpace.com. He spends most of his time reading and writing about the current affairs in the world of information technology. When he isn’t working, he likes going for long bike rides and walks in nature.