Owning a small business is an all-out battle to find the right balance between generating revenue and limiting costs. That’s especially true in a business’s first year, when finding a sustainable customer base requires investment.
We asked Rita Cheng, a financial advisor who works with small businesses, about ways entrepreneurs can keep costs down in the early months. She is a member of NerdWallet’s Ask an Advisor network.
How can small-business owners control costs in the first year?
For certain types of small businesses, especially software-based companies, co-working spaces may be worth considering as an alternative to renting expensive office space. With co-working spaces, you can rent a shared space alongside other entrepreneurs, which not only gives you a productive place to work more affordably but also a powerful networking opportunity. Sharing space could lead to teaming up with other businesses to potentially share resources.
Also, take advantage of discounts available to you through membership associations or professional associations. Some examples may include office supplies, postage, software subscriptions or professional advice. You also can ask for a free trial prior to signing up for software subscriptions. Not only will this give you a free service for a short time, but it also will help you avoid committing money to something that might end up not being right for your needs.
How should entrepreneurs invest in growth while still controlling costs?
- Be judicious when hiring new team members, avoiding the temptation to hire someone quickly to fill a need at the expense of making the right hire. Dealing with an employee who is not working out takes your focus away from building your business.
- Consider hiring a virtual assistant. This person can support your business without having to be in your location (and without having to be a full-time employee). The value of virtual assistants is that they can help you focus on more productive activities. Some virtual assistants set and confirm appointments, manage payroll, and handle communications and social media. As a new business owner, you want to allocate your resources wisely.
- Sponsor an internship at a local college or university. This could bring talented young people into your company who can serve your immediate needs, and they might even grow into full-time workers. Make sure you are looking out for the interns’ needs as well by offering them a legitimate learning experience.
- Use online freelance sites that can connect you with talented people who can create logos, design brochures, edit promotional documents and do digital marketing. Rates can be reasonable, and it will give a more professional sheen to your company’s external image. That’s better than spending time on things you’re not great at.
Any other tips to help businesses stay efficient?
It’s important to recognize the best use of your time. It’s tempting to do everything yourself, but is doing payroll, bookkeeping or paperwork the best use of your time? Sure, you need to understand these processes, but you don’t want to spend so much time on operations only to neglect business development or serving your customers and clients.
Look for ways to make your money go further, like earning credit card rewards. From January 22 through March 31 business rewards cardholders at Idaho Central can earn 2x bonus points on office supply store purchases!