This is a guest article contributed by Daniela Baker*.
The success or failure of a business depends on how wisely you allocate start-up funding. As a solo-preneur you can monitor every expense and decide where your money will best be spent to get your business off to a good start. Here are four suggestions for controlling start-up costs.
Be Flexible & Smart With How You Get Funds
The cost of borrowing, along with the terms attached to most loans, can make them quite prohibitive to the small business owners. However, there are several other options new business owners may consider when seeking inexpensive and flexible financing. One of the most common methods is to raise capital from family and friends as these loans often offer attractive terms with very low, if any, interest.
Geoff Morris, chair of the Entrepreneur’s Forum, is a strong proponent of this approach. Mr. Morris advocates the use of funds from family and friends since terms are favorable with low, if any interest.
Keep in mind that borrowing from family and friends could put a strain on these relationships if the business does not grow as you had anticipated. For this reason, it may be best to borrow smaller amount from a wider range of people than large amounts from just one or two.
Think About Your Office Space
As a designer or freelancer it is likely that you will be working out of a home-based office so this may not be a significant issue. Too many new business owners fall into the trap of spending too much money on the trappings of a luxury office. As per Mr. Morris, new business owners should use utilize extra space in their home, even the garage for as long as is feasible. Another possibility is to join a start-up incubator. An incubator is a great option for new entrepreneurs as these spaces typically provide access to a copier, scan, telephone and fax services. Not so incidental is that an incubator also permits you the opportunity to interact with other start-up business owners for support and camaraderie.
Consider Your Options for Computers / Equipment
As a modern designer, it is is more than likely you will need a computer / laptop with a consistent Internet connection, along with software. The next step is to identify the least expensive option for purchasing these products. One idea for new business owners is to rent and lease a laptop rather than purchase, since this gives you the flexibility to change models as your business grows. Because a computer is essential to your business as a designer, do not shortchange yourself in this one regard. Also, remember there is no magic button.
Use Low-Cost Marketing Strategies
There are several low-cost strategies small business owners may employ to keep marketing costs down, especially with social media. Create a page on Twitter, Facebook and LinkedIn and engage prospects with status updates that pose questions or ask for feedback. Engage with your network. Join discussion groups or start a blog to become recognized as a thought leader in the field. Email can be used to promote special offers. Write an article or series of articles and submit to article directories or as guest postings on the sites of colleagues.
Do you have any other tips to help keep start-up costs low?
*Daniela Baker is a small business blogger at CreditDonkey, where she helps startups compare small business credit cards to maximize rewards. She says, to sum up the philosophy of start up costs: Spend small to grow big! Photos by Shutterstock.