New business owners must understand that one of the most crucial things that they have to do is control costs. Right from the beginning of your business it becomes crucial to keep the costs of your business under control. Studies indicate that the number one reason for business failure is poor financial management. Failing to keep costs under control can play a major part in this. However, it can be much more difficult to keep costs under control when your business is just starting out. The traditional methods of cost control may not work. However, if you are willing to be creative and do some planning you can find ways to keep your business running as it gets financially bigger and stronger. Here is what you need to know about how to control costs in your startup business:
- Have a separate source of income – One of the most common problems that many new business owners have is finding a way to afford to start up a new business. The solution to this is that you may not be able to afford to quit your job before your new business is profitable. While it can be tempting to quit your job and just work on your new business if you have bills to pay that may not be possible. You should take steps to make sure that you have enough income to pay your bills and support yourself before starting a new business. This way you will not have to add to the cost of your startup business.
- Put off getting a space for your business – The largest expense that most businesses have is the space that you have to rent to run your business. If you can run your business from a home office or other space without having to pay rent you can save your startup business a significant cost at least for the time being. You may even be able to take the home office tax deduction (be sure and check with your tax preparer). Best of all, this will give you a chance to put more money into your startup and make sure that it is running well before you have to rent a space.
- Team up with another business – Another way to control the costs in your start up business is to team up with another business. Startup businesses generally have limited resources but by combining your resources with another business or several other businesses you can utilize your resources to be more effective and save costs for all the businesses that are involved in the cooperative effort. You may even want to team up with another business to share physical space which can save both businesses a lot of money and help to control costs.
- Consider barter for services – Many new business owners choose to use barter for services. You may be able to offer services in trade for the supplies that you need. Keep in mind that while this arrangement may seem untraditional or daring many new startup businesses get a foot hold this way. Best of all, you can often save yourself significant expenses while growing and developing your business. Don’t be afraid to think out of the box-remember the worst someone can say is no!
- Extend your accounts payable – Finally, another way to save costs for your startup business is to ask for extended accounts payable terms. Remember, that there is nothing that benefits you by paying your bills early. While you should certainly pay all of your bills on time asking for extended payment terms allows you longer use of your money.
Business Knowledge Source