For early stage businesses, it's pivotal to keep on top of outgoings, not only for successful growth but also for survival. You may have a great idea, but there is no guarantee that your business will survive, even if you work hard and your product or service is well received by the market.
The sad fact is that good businesses fail every day, with figures from the Office of National Statistics showing that one third of UK start-ups fail before year three.
Last year, Intuit polled 500 small business owners and found that a total of 64 per cent had started with less than £5,000, with 44 per cent either running out of cash or coming very close to doing so since launch.
Here are a few ideas to help you maintain low overheads and give you the best possible chance of success:
While every entrepreneur dreams of his or her glamorous office, in the early days many businesses function perfectly well out of a spare bedroom or garage. If this does not work for your venture, there are many shared spaces or small business incubators available, such as Hub Westminster in London, where business owners can work productively and benefit from meeting other like-minded individuals. These start-up hubs are great networking spaces and can provide a flexible and economical office alternative for entrepreneurs.
Before you kit your company out with all the latest gadgets, be sure to think carefully about exactly what you need. Make a list of your company's main functions and work out exactly what you need to carry out each task. Sourcing these items is the next challenge as prices can vary hugely across different outlets.
Purchasing equipment second hand or online can help you save money, however it is important your savings are not to the detriment of quality. There is also a whole host of free tools, software and apps, including MyBizTracker, which can save you both time and money - so do your homework and check out what's on offer before spending valuable cash on expensive kit.
When starting out, sound planning and preparation is crucial for any business. Getting your numbers right and keeping on top of the books can make the difference between success and failure. So while it may seem like you can get by with spreadsheets or other manual methods, using accounting software such as QuickBooks from the outset is a wise move. It will give you more insight into your business and save you time on important tasks like tracking income and expenses and preparing professional invoices. It can also help you improve cash flow and ensure you get paid faster with payment reminders to ensure that the cash you're owed arrives in your account rather than sitting in someone else's.
For early-stage businesses, growth is vital. Winning new business and new projects is the ultimate goal, which often requires you to increase your staff base. However, this does not necessarily have to mean driving costs through the roof. There are a number of options available, such as hiring freelancers or contracting out project work, which enables companies to source high-quality labour on a temporary basis. One of the key benefits of hiring freelancers is that they don't bring with them the headache of National Insurance or many of the problems associated with hiring and firing staff.
There are a myriad of cost-effective ways to market your business and with the internet age has come numerous online channels and social media platforms. Facebook, Twitter, YouTube and LinkedIn are just a few of the social networks that small businesses use to tell potential customers about new products, interact with existing clients and promote their service to the outside world.
To establish your company's web presence and help create a more profitable business, you need to think about who your customers are, how potential customers can find out about your products or service, and the type of relationship you want to have with them. A good knowledge of your customer base will help determine your social media strategy, which will enable you to find relevant Twitter hashtags, Facebook groups, and other web channels where interaction will benefit your business.
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