Several different problems can plague a startup. One common issue is a lack of funding, making it difficult to hire employees and grow the company. Other issues can include an inability to attract customers or keep them engaged and struggles to differentiate the company from its competitors. If left unchecked, any of these problems can lead to the demise of a startup.
All these problems are understandable, but one of the main problems that every new entrepreneur knows is the overhead cost of the first year of the business.
The Cost of Starting a Business
Starting a business can be more expensive than the overall overhead cost of a business that’s already been running for years. This is because many initial costs come with starting a business, such as a cost of registering the company, setting up an office, and purchasing equipment and supplies. Additionally, businesses often have to invest in marketing and advertising to attract customers and grow the company. These costs can add up quickly, making it difficult for startup businesses to get off the ground.
It’s estimated that an average startup with ten employees will take $184,000 to start. That’s a lot of money for a new business, and it can be challenging to raise the necessary funds. As a result, many startups rely on personal savings, loans from friends and family, or credit cards to finance their businesses. However, these funding sources can be unreliable and might not be enough to cover all the costs associated with starting a business.
If you’re planning on starting a business, you must understand the potential costs you might incur. By being aware of the expenses you could face, you can be better prepared to manage your finances and make your startup more successful. Here are some ways to avoid spending on starting your first business.
Start a Micro-business
About 80% of your expenses will go to paying your employees. If you want to reduce your startup costs, consider starting a micro-business. Micro-businesses are defined as businesses with five or fewer employees. This type of business is less expensive to start because you won’t have to invest in as much office space, equipment, or supplies. You’ll also save on hiring and training costs since you’ll need fewer employees.
While a micro-business might have some disadvantages, such as a lack of resources and a smaller customer base, it can be a great way to save money when starting a business.
Also, consider hiring freelancers if you want to save a lot more money. Freelancers can be a great way to get work done without paying full-time salaries and benefits. You can find freelancers for almost any task, from marketing and web design to accounting and data entry.
Buy a Used Company Vehicle
Another way to save money when starting a business is to buy a used company vehicle, especially when purchasing an SUV.
SUVs are usually the primary choice of businesses when buying a vehicle. It has good space, is reliable, and have a ton of room for employees. However, a new SUV can be a significant expense and is not always necessary for a business. Instead, you can find affordable used SUVs that are reliable and will get the job done without breaking the bank. Plus, buying a used SUV can avoid some of the depreciation that comes with owning a new car. This means that you’ll save money in the long run, which can be helpful when you’re trying to keep your startup costs down.
Look for Office Space Deals
The median cost of an office in the United States is $216 per square foot. So if you’re looking for a 1,000-square-foot office, you’re looking at a $216,000 expense just for the space. This doesn’t even include the cost of furniture, supplies, or any other office expenses.
If you’re looking for office space for your startup, don’t feel like you have to buy or lease an expensive space. Instead, you can find affordable office space by looking for deals like subleasing or shared office space.
Subleasing is when you lease office space from another company that already has a lease. This can be a great way to get affordable office space because you’re piggybacking off another company’s lease. Shared office space is when you share an office with another business, which can also help you save money on your startup costs.
Both options can be significantly cheaper than leasing or buying your own office space. So, if you’re looking to save money on your startup, consider subleasing or sharing office space. It won’t affect your productivity during the first few years of business since you’ll be focused on building your company.
Starting a business can be expensive, but there are ways to save money. You can reduce your startup costs by following the tips above. By doing them, you can start a business for as little as $50,000! It’s one of the best ways to cut costs and ensure your business is here for years.