These smart money saving tips can help you some of the most common cash flow pitfalls encountered by entrepreneurs today
Most entrepreneurs have two things in common: and endless supply of brilliant ideas, and a very limited supply of funds in the bank. Securing funding is one big step in launching a successful startup. Using those funds wisely is perhaps the more important next step.
Make smart choices in how you invest your money in order to avoid early cash flow problems. Start by considering these money saving tips.
1. Use flexible workspace
One of the biggest money drains for any startup is the overhead cost of an office. Rent is expensive, so before you go looking for a charming storefront for your business, ask yourself why you want an office in the first place. Do you need a place to meet with clients? Do you need a place to work on mock-ups with your team? Or do you just want an office for the feeling of legitimacy it may lend to your business?
All of the above concerns can be addressed with drop-in workspaces. Companies like Regus take all the hassle out of finding an office to rent, buying furniture and computers or juggling extra bills like Wi-Fi. With flexible workspaces, you pay for only what you use. Run your startup on a remote or virtual setup in the early stages, and use a flexible workspace as your office only when the need arises. Better still, you can use the workspace address as your business address, which helps establish your startup’s credibility.
2. Build your sales team first
Even before your product is 100 per cent ready for the market, you need sales personnel on the ground making connections and talking about your startup. The reason for this is simple: You can’t make any money without sales, and without money you can’t continue to grow your business.
Virtually everyone on your team should be sales-savvy. If you can only afford to hire five people, then hire five people with a sales background. Offer sales commissions as primary payment or as bonus pay to keep sales personnel motivated and to keep what little money you have in the bank.
3. Outsource specialised tasks
As the business founder, you already have a lot on your to-do list. It’s reasonable to be a jack-of-all-trades in the beginning, but as soon as you have a little extra cash saved up, outsource some of the tasks you are least comfortable with. Outsourcing allows you to hire someone on an as-needed basis rather than full-time.
Consider hiring a consultant, contractor or freelancer for human resources, accounting, graphic design, copywriting, marketing, and social media management. As your company grows, you can justify hiring a full-time in-house team to take care of these essentials.
4. Keep benefits small initially
Wanting to offer an incredible benefits package is absolutely a noble cause, and one that your employees will appreciate. But it might not be practical in the early stages. Yes, some of the big, trendy companies offer gym passes and coffee discounts and a whole host of benefits above and beyond great insurance deals and retirement plans. As a startup with very little money in the bank, focus on what matters most to your employees. Most likely, it’s insurance.
This is another perk of hiring contractors on an as-needed basis, as you won’t be expected to provide a benefits package for one-off or periodic jobs.
5. Find a mentor
A business mentor is not only an asset and ally to your company, but also a friend who can speak from experience when giving you advice. A good mentor isn’t afraid to tell you what you need to hear in order to make your startup grow. And whereas you might have to pay a consultant to tell you what to do with your business, a mentor will guide you for free.
A mentor who understands the legal requirements of running a business is especially useful. However, take a good look at your own weaknesses and decide what skills would best complement your own. Maybe a mentor with ample marketing experience would be a better match. Or perhaps your startup needs a mentor with a great sales record.
No matter who your mentor is, it’s important to treat them with respect. Ask a lot of questions, but don’t ask for a thousand favours. A mentor will tell you what you need to do and set you up with other connections in their network when possible, but it’s up to you to do the leg work for your own start up. Have regular phone calls scheduled so that you can check in and give progress reports.
Many people enjoy being mentors and want to see your venture succeed, so don’t be shy about asking someone you admire to be your mentor. Respect their answer if they decline.
If you follow these tips and are careful to never buy something you don’t need (or at full price, for that matter), you can avoid some of the most common cash flow pitfalls encountered by entrepreneurs today.
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