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13 ways to save money when starting or growing a business

Select strategies which can best keep your cash flow healthy.
By Michael Glauser |

 

Trying to run a lean business? Here is a list of 14 valuable strategies I have seen successful entrepreneurs use over the years to launch and grow their companies with minimal costs. Study this list carefully, then decide which of these you can use in your new enterprise.

 

 

1. Mentors and advisers

Instead of paying for advice on legal, accounting, funding or other key business issues, use your brain trust of mentors and advisers as much as you can for advice, feedback, and meeting other important contacts.

 

 

2. Barter or trade

Bartering—swapping one thing for another—has been an effective way of doing business for centuries. In recent years, bartering has evolved into a sound strategy for finding goods, trading services, conserving cash, moving inventory, and locating excess production capacity.

 

 

3. Nonmonetary incentives

Members of your team will often work for equity or deferred payments rather than initial salaries. This will help you keep costs down during the launch and early growth stages of your business.

 

 

4. Supplier partnerships

The right suppliers can save you a great deal of time and money. They can provide high-quality materials, help with product development, offer on-time delivery, and allow extended payment terms. Obtaining 30 to 90 days of trade credit is the best business loan you can get.

 

 

 

5. Customer partnerships

Partnering with customers during your launch is an excellent cost-saving strategy. Select a few key customers and offer them deals they cannot refuse like discounted pricing, special packaging, strong support, etc. In exchange for these deals, ask for long-term commitments to purchase your products. And whenever possible, get customers to pay early—ideally, even before you deliver their products or services.

 

 

6. Outsourcing

Outsourcing is a multibillion-peso industry. You can find outsource partners to provide about any product or service you need. Outsourcing turns what would normally be a fixed cost into a variable cost because you only use the service when you need it.

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7. Distributors and affiliate partners

Most industries have distributors, manufacturers’ representatives, and affiliate partners who will sell your products through their existing distribution channels, which can be extensive. This is a great way to build sales quickly and conserve cash because you do not pay the partner until your products are sold.

 

 

8. Commissioned sales force

Use a commission sales program when you are ready to hire team members to sell. This will attract people who really believe in you, your products, and your purpose. It also conserves cash by keeping your fixed costs low.

 

 

9. Work virtually

In this new age of technology, it is possible to work from about anywhere: from home, in your car, at the airport, or in a hotel room. By working virtually—and allowing your employees to do the same—it is not necessary to take on the expense of establishing an office when you are launching your business.

 

 

 

10. Borrow, rent, buy used

Find ways to use other people’s resources in addition to your own. Whenever possible, borrow rather than rent; rent rather than buy; and buy used rather than new. Some industries have excellent equipment available for a discounted price. Also, go to bankruptcy sales and auctions to see if you can find what you need.

 

 

11. Use free software

Free and inexpensive software is plentiful online. Various available programs can help you manage your finances, plan your projects, track your customers, and much more. You can also take advantage of free trial periods for most business software. This gives you a chance to use the application for free for 30 days or more to determine if you really need it.

 

 

12. Minimize your expenses

Keep your personal expenses to a minimum when launching your new venture. This is not the time to buy a new house or a new car or take on personal debt. The longer you can live with minimal expenses, the better off you will be. Likewise, do not take on any ongoing business expenses unless they are absolutely necessary.

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13. Sell, sell, sell

In startup companies everyone is in sales. All your team members need to talk about your company, promote your products, and assume responsibility for producing revenue. Remember, low costs and early cash flow are critical to success.

 

 

***** 

Copyright © 2016 Entrepreneur Media, Inc. All rights reserved.

This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.

 

Photos from Thinkstock

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