By Mashum Mollah
There has been a spike in new business registrations in the past year. In fact, national statistics show that over 4.4 million new companies were started in 2020, which is both a 26.9% increase from 2019 and is also the biggest spike in new company registrations in the past decade. Based on these statistics, it’s evident that there is a strong interest in venturing into an enterprise, but the ugly truth is that only a few of these fledgling businesses will survive in the next few years.
Business owners that are seasoned and knowledgeable know the importance of starting a business on financially-healthy terms. This entails that new businesses need to save money where they can. These are some of the modern ways to do so.
Use Cost-Effective Advertising Mediums
Traditional advertising is expensive and limited in reach. Mediums such as TV commercials, billboard ads, newspaper ads, and direct mailings are quickly becoming obsolete. There are many cost-effective mediums that you can use to reach your audience and many of them are a fraction of the cost of their traditional advertising counterpart. Leverage the internet. Use social media, Google and Linkedin ads, search engine optimization, and web development to reach your audience. These solutions aren’t just cost-effective, their effects also long-lasting as long as you’re able to deploy these methods properly.
Automate Data Entry
One of the seemingly trivial but tedious aspects of a worker’s task comes in data entry. Data entry is not only time-consuming, but error rates increase with worker exhaustion. A simple macro command can automate the data entry process at the click of a button, accomplishing a task in seconds instead of hours. It’s as simple as putting an ad on a freelancing website for an Excel or Google Sheets guru, showing them the data work that you need help automating, and testing whether the automation works, and making adjustments when necessary.
Start Small, Test A Lot Often
Most inexperienced business owners dream of introducing a product that will take the market by storm, replete with revolutionary features and characteristics. However, the truth is that most new businesses don’t have the necessary capital to produce such a final polished product. The perfect product is honed progressively. Rather than refining your product by batch, come up with your minimum viable product and test several variations at once. This way, you’d be able to come up with your best possible version without committing too much money to refine your product by batch.
Review Expenses Periodically and Determine Usability
Operational costs take a heavy toll on your profit margins. Every business needs services such as telecommunications, data management, and security, cloud services, bookkeeping, etc. It’s important to review these services and to determine whether these services are being utilized fully. Services that aren’t fully utilized can either be scaled down or completely removed. This ensures that you pay only for what you need. Not only will you free up resources to increase profit margins, but you can also use these freed-up resources for other services that you are in greater need of.
Outsource and Collaborate
Keeping your overhead costs low not only improves the chances of success of your business, but it also gains you a competitive edge. Fledgling businesses need to focus on setting foundations and taking roots in their chosen market. While processes such as recruitment, compensation and benefits, and other support functions are important, there’s no need to fully invest in them by hiring in-house personnel. Leverage outsourcing companies such as E3 Works to help you focus on your core business. Outsourcing companies are an easy way to gain access to skilled and experienced staff without having to pay for their training and benefits. Moreover, you pay them only when you need their services versus having to pay a fixed cost when you hire in-house personnel.
Leverage Freelance Experts
The advent of the internet paved the way for the gig economy to flourish. Now, there’s a myriad of experts that you can tap for whatever you need, whether it’s for lead generation, software development, and other fields. Outsourcing support staff and leveraging freelancers allow you to tap into a more diverse labor pool. These experts often already have their own training, equipment, and knowledge, which means that you won’t have to spend on them. The true value of freelancers is that they almost always have extensive work experience having worked with many clients across many industries. Most of all, hiring these experts is often on a project-only basis, which means that most times, these are one-time expenses only and you can hire and rehire them as needed.
Cut Expenses, Not Employees
Cutting employees should not be viewed as a cost-cutting measure. Remember that your workers increase in value over time because of the experience gained, relationship nurtured, and also because they tend to have a much better understanding of your company’s work processes and culture. When your business hits financial difficulties, try to cut expenses where you can without cutting employees. If you used to serve free lunches and dinners to your workers, consider serving just one meal. More often than not, your workers would rather keep their jobs, and businesses are better off by keeping employees instead of having to go through the costs of recruitment and training. This is true even when situations improve and you find yourself rehiring former employees.
Hire Smart, Inexperienced People
Experience isn’t always the sole measure of a worker’s value. As previously mentioned, employees gain value over time. Avoid setting years of experience as a prerequisite and instead invite fresh graduates to work for your company. The rationale behind inviting fresh graduates is that you get to pay them an entry-level salary while also benefiting from their knowledge of the latest industry trends. Not only that, but fresh graduates are often quick and eager learners.
As a new business, it’s important to minimize your expenses without compromising the quality and functionality of your operation. Saving money not only maximizes your profit margins but also ensures that you’re financially-ready to take on difficult periods over the course of operating your business.
