Whether you are funding your business yourself, taken a bank loan or have investment seeing a large sum of money in a bank account is exciting. The prospect of turning your dream into a reality has never been closer. But many entrepreneurs tell the same story about how they wasted money on things that turned out to be entirely irrelevant to the success or failure of their business. In fact wasting money in the early days meant that their businesses ran out of cash too soon, endangering their ability to continue trading or stopping them completely.
So before you find yourself tied up with monthly commitments – here are 5 things you shouldn’t waste your start up money on and some cheaper alternatives:
Yes, you want to open for business but rent is an expensive commitment, especially if you haven’t made your first sales yet. So before you sign up to an office space consider whether you actually need it or whether cheaper alternatives may work for you just as well before committing to an expensive lease agreement:
- Shared office space: you can rent a desk or touch down space in places like wework or workspace. This is a much cheaper alternative to renting an entire office and gives you the ability to booking meeting rooms (usually for an extra fee) as and when you need them;
- Running your business from home: running your business from your own home can be one way to getting your business up and running without much extra cost to your day to day living and even bring tax relief; ;
- Consider your location choice and the type of business you run after all an office in central London is much more expensive than one in the suburbs. Think about where you need to operate from and whether you can choose to run from a cheaper location to save money.
Having the right team is key for any business however start ups can often find themselves overstaffed in the early days or, even worse, making bad hires as they try to recruit people quickly or cheaply. Recruitment brings the cost of monthly salaries, pension schemes, equipment and even hefty recruitment fees all draining your cash resources.
Here are some alternative ways of getting the help you need to get your start up off the ground:
- Freelancers: get ad hoc help as and when you need it without a monthly financial commitment by using freelancers on websites such as people per hour or freelancer;
- Offer shares or share incentive schemes in your business as part of potential employees salary package to reduce the amount you pay them each month;
- Don’t overstaff: take a strategic review of your business to assess what help you really need so you recruit the right people rather than lots of people you don’t really need. Perhaps you need a co-founder who can be a leader or maybe you just need a PA to help with administrative duties while you handle the business side of things. Just try to avoid wasting money on lots of team members you don’t really need.
Your website represents you, your business and what you offer. However often you can launch your business with a simple website, what is known as a minimum viable product, which means you can get your product out to market quickly and get testing it on your customers.
There are many entrepreneurs out there who will tell you that their original product was not their final product. Instagram is a famous example of this. Instagram was originally started as a gaming and check in app but it was not successful as users found it too confusing. It was stripped back and became the simple photography app we all know now.
There are many other products out there that went through many evolutions before they became the products we know and love now so conserving money so you can fund the permutations your product may need to go through will be business ciritcal.
- Develop your own website: wordpress or shopify are examples of hosted sites designed for small business owners to be able to build and maintain their own websites;
- Use freelancers: again using freelancers could be a cheap way to develop you a very simple website at a low cost.
Advertising can be expensive and it can be difficult to judge with certainty the return you will receive. Although anyone selling adpsace will probably throw lots of great statistics at you!
Choose cheaper alternatives like targeted facebook ads or PPC campaigns with small budgets where you can control who sees your ads, when and you can quickly make changes if you feel you need to make changes to your ads.
You business must have a name and branding you are proud of, after all it is your baby. But branding agencies will spend hours coming up with names for you, analysing them and maybe even leading you down a route you had not envisaged – all for a hefty fee.
- Brainstorm Yourself: grab a pen and paper and create a mindmap of your business, this could draw out potential names. Or sit down with friends and family to discuss your idea and come up with a great name and Company description which you can then pass to a creative to work with and design you a simple set of stationery.
- You an online generator: these is a really quick and easy way to get some basic branding done. Yes, it may not be the most imaginative but it will get you started and earning money to pay for your dream branding when you are sure your business is working out.
Read more real life stories of well known brands who made mistakes in the early days of launching their startups in ‘Entrepreneur: How to Start an Online Business by Lucy Tobin’. It features interviews with the founders of brands such as Moo.com, Moonpig and Zoopla and some great advice on starting a business from their own experiences.