Ways to Save When Starting a Business

Starting a small business and getting a bit overwhelmed? Since only about one in three businesses survive to the ten-year mark, it’s very important to form a lean, flexible plan, develop several business cost-reduction strategies, and familiarize yourself with some less-obvious methods of saving money. In business, there are many options for cutting back. These are some ways for companies to save money at the beginning, during the startup phase, and during times of crises. Learning how to cut costs and save money in business takes time, patience, and experience, but hopefully our list of ideas will help you find a method you may have never thought of. Check out our money-saving tips for small businesses as you’re starting up, and conquer your first year!

Important Resources to Know About When Starting Your Business

While researching the best ways to save money and cut back on startup costs while starting your first business, don’t reinvent the wheel. Many resources already exist out there that will help give you the right advice, and sometimes, you’ll be able to network with other experienced small-business owners or consultants within communities to help you get on your feet. Our helpful list of resources for small businesses will point you in the right direction of who to talk to.

Government and Nonprofit Groups for Learning and Networking

These are some of the most important federal services and nonprofit groups to be aware of when you’re starting out:

U.S. Small Business Association — This is the ultimate official resource whether you’ve just gotten a cool idea for a business, you’re trying to parse out legal terms, or you’re looking for money-saving tips for small businesses. The Small Business Association (SBA) has lending information, online courses, local help, and numerous guides to help you out. If there’s one resource in our list of small business resources to remember, it’s this one!
SCORE Mentorship — An official resource partnered with the U.S. Small Business Administration, SCORE is an organization that pairs small business owners with experienced mentors via workshops and one-on-one guidance. They also offer a library of tools. And it’s completely free to you. We’d highly recommend talking to a mentor about operation cost-reduction strategies before making severe business changes.
Small Business Development Centers (SBDC) — Across America is a network of local centers meant to help you connect with local businesses and get free consulting. Find your local SBDC.
National Association for the Self-Employed — Get expert advice, tax help, and small-business savings on everything from domains to health care.
National Business Association — Another network of small-business owners, this group works closely with SCORE and the SBA.
National Federation of Independent Businesses (NFIB) — This nonprofit association is an important advocacy group as well as a good place for legal and business resources.
The National Women’s Business Council — If you’re a female business owner, this wide network of women and helpful resources can aid you in your journey a great deal. (Note that if you are a female business owner, you can also consult the Women’s Business Center (WBC) through the SBA for help.)
Women’s Business Enterprise National Council (WBENC) — An entrepreneur-oriented business resource for women, this group offers CORE: certification, opportunities, resources, and engagement.
The Minority Business Development Agency — Minority-owned businesses qualify for many different kinds of aid and programs.
USA.gov Small Business — Learn from a vast network of information from the federal government.
IRS Small Business Portal — Learn everything you need to know about federal taxes so that you can find out ways to save on taxes for small business.
Federal Business Opportunities (FedBizOpps) — If you have a business that could contract with the government, try browsing through this federal job listing site.
U.S. Chamber of Commerce Small Business Nation — The U.S. Chamber of Commerce offers free tool kits and resources, as well as some information about the latest tax reforms, for small businesses.
International Franchise Association — If you’re opening up a franchise, definitely check out this important advocate.
OSHA for Small Business — Make sure your safety practices will be up to code.

Other Helpful Resources for Small-Business Owners

These are not official nonprofit or federal resources, but they’re still very useful and popular for a variety of startup needs:

LegalZoom — Making “legalese” as easy as ever, this tool allows you to do simple tasks like form an LLC, apply for a trademark, and even fill out your estate plan, all online. There is also a network of attorneys who can help you out.
Incorporate.com — This is another place to get the legal elements of starting a business done.
The Name App — If you haven’t got your business’s name down, see if different options are available both for the domain and social media accounts.
Startup Stash — Find the free tools you need to start your businesses with this simple directory.
My Own Businesss Institute: Starting a Business — Get free online business courses from Santa Clara University.
Startup Grind — Connect with investors directly with this independent startup community, which offers entrepreneur education as well as networking opportunities.
Gan.co — Another great place for startups to interact with investors, this community also offers events and opportunities.
Shopkeep’s How to Start a Small Business 101 — This dense, popular guide takes you from your idea to opening your doors.
Entrepreneur’s Free Business Forms and Templates — Grab templates for business plans, employee reviews, invoices, and more.

We’ve just barely scratched the surface of the different small-business tools and resources out there. Spend some time looking around and you’ll find dozens of free tools that will help reduce costs and fulfill a need. For instance, for communicating internally, you could go with Slack, and for emailing customers, you could go with MailChimp. There are hundreds of options to check out!

Before Starting Your Business: Saving and Planning

As you’re preparing, it’s important to find money-saving strategies for reducing business startup costs. Put your best foot forward by creating a tight, smart, and effective business plan for your first year.

How Much Does it Cost to Start a Business?

There’s no real way to calculate the average cost to start a business, but we do know that at-home micro-businesses are frequently started with between $1,000 and $5,000, whereas franchise fees tend to average around $20,000 to $50,000 and typical mom-and-pop restaurants take a median startup cost of about $250,000. And of course, some small tech companies can require millions.

If you’re asking yourself, “How much money should I save to start a business?” the answer lies in how much your expenses and operating costs will be. A general rule of thumb is to save anywhere between six months to two years of business expenses plus personal living expenses. If you want a more detailed amount of money needed to start a business, use this calculator by Entrepreneur.

Small-Business Startup Costs List

Here are some examples of things you’re likely going to have to pay for within the first few months:

Inventory — 25% of the budget
Office Space — $1,000+ per month
Legal Fees, Licenses, and Permits — $300 to $1,000
Payroll and Employee Expenses — 25% to 50% of the budget
Equipment and Technology — $10,000+
Furniture and Other Supplies — 10% of the budget
Website — $25 to $100 per month
Logo — $100 to $1,000 one-time fee
Marketing, Advertising, and Promotion — 10% of the budget
Utilities — 5% to 10% of the budget
Consultants and Focus-Group Fees — $1,000+ per year
Insurance — $1,000+ per year
Borrowing Fees — Varies
Taxes — Varies
Travel and Shipping — Varies

While you’re listing out your startup costs, you’ll want to bundle them together by one-time expenses and expenses you’re going to have to pay regularly in the future. Here’s a good example of what a sheet of startup costs look like.

How to Save Money to Start Your Business

If you’re thinking, “I have no money but want to start a business,” it can be daunting, especially if you don’t have a clear-cut plan. But if you start to create a firmer plan and learn about the cost of running a business, you’ll have a clearer idea of how much you need to save or find capital for. Here’s how to save money to start a business!

Strategies for Saving Money to Start a Business

Of course, you can always wander into the world of venture capital and try to find a backer for your ideas, but let’s say you want to go it alone. Saving to start a business can be very difficult when you’re supporting yourself or your other interests, but here are some key things to keep in mind.

Create a separate savings account for your business. Keep your savings for your business separate from your other money and it will be easier to see it pile up.
Get debt-free. Attack your higher-interest loans, such as student loans, first.
Sell old assets. Selling old homes, stocks, and bonds may be a smart way to gain a lot of income at once.
Work on your credit score. Before you go in for a potential small-business loan, make sure your credit score sparkles like the top of the Chrysler Building.
Start your business from home. It may be possible to start a smaller version of what you hope will be a larger business from your home. For instance, if you want a bakery, you could get the appropriate licenses to sell cupcakes out of your home before investing in real estate on Main Street.
Be smart with coupons. Use CouponFollow to find coupons for items you’d normally need. Don’t pay full price for anything — business expense or otherwise!

Ways to Find Funding

Of course, you don’t need to do it all yourself. These are other popular strategies for getting the funds you need:

7(a) Loans — The SBA offers a loan program for small businesses, with varying interest amounts and conditions.
Venture Capital — The competition can be very intense, but very rewarding, for this type of funding, which involves firms investing in your company.
Crowdfunding — Sites like Kickstarter and GoFundMe can be leveraged to raise capital for your next big business.
Peer-to-Peer Lending — Sites like LendingClub allow you to invest in other businesses and borrow for your own.

How to Make a Realistic Plan

Balance sheets, cost-benefit analyses, and business plans need to be drawn up in this phase, no matter how big or small your business may be. Run through multiple scenarios: What if you make 50% of your expected income? What if a disaster hits in your first year? Make sure your cash flow makes sense!

Tools for Creating Small-Business Plans

Having a good plan is the key to reducing business startup costs. Here are some helpful tools:

SBA Business Plan Tool — This official U.S. SBA tool is a great jumping-off point.
The Business Model Canvas — If you’re trying to get from idea to realistic business plan, this tool can help break down the various elements in one sheet.
Bplans — Chose from more than 500 free sample business plans to help you get started.
Enloop — Create your own business plan with this simple tool that allows you to get into the nitty-gritty of your plan.
Rocket Lawyer’s Free Business Plan — This document is a simpler outline with tighter legalese.
The $100 Startup Business Plans — These super-simple plans will help you keep everything in perspective.

After Starting Your Business: How to Cut Expenses

Going from opening day to the end of the first month can be really intense and overwhelming. Suddenly, costs can seem to spiral out of control really quickly. We’ve gathered some helpful tips on how to reduce expenses, control costs, and keep your head above water, even in tumultuous times.

How to Control Expenses in Business

Making smart decisions while your business is doing great can help so many things further down the line. These are some budget-cutting ideas to use even and especially while you’re just starting out and things are going great!

Five Key Expenses to Watch Carefully When You’re Starting Out

Be proactive to avoid getting caught spending thousands of dollars unexpectedly on some of these issues:

Theft and Other Losses — Make sure your security, both online and offline, is solid. Also, be sure that you’re prepared for natural disasters and lawsuits with the right insurance.
Equipment Breakdowns — Breakdowns and poor maintenance may lead to major costs at the worst moments. Be sure your employees are fully trained on the upkeep and maintenance of your equipment.
Employee Accidents and Turnover — Having to constantly train new employees can be costly. Paying for workers’ compensation and lawsuits can be extremely costly. Be sure that you’re investing in and protecting your employees.
Utilities and Supplies — Ordering offices supplies in bulk may be a good idea, but not if your employees use them in bulk. Also, be sure to watch that electricity meter.
Travel and Business Expenses — Have clear-cut rules on travel expenses, and be consistent with them with your employees.

How Can Small Businesses Cut Costs?

Whether you’re slightly or severely in the red, it may be time to look closer at the books. But frequently, panic causes small businesses to make unwise cuts, and the fat never gets properly trimmed. How do companies save costs when they’re struggling? Here are some ideas for cutting business expenses organized by whether you’re in an OK or pretty bad situation.

Simple Ways to Cut Expenses Early On

Perhaps you have a business running at a loss, which is fine now but not sustainable in the long term. Here are some tips to reduce expenses quickly but not drastically, having very little impact on your operational functions:

Save on energy. Update energy-sucking machinery if you can afford the expense. Update your fleet of vehicles to hybrid or electric options. Also, make sure your office space is well-insulated and your thermostat stays at a low, consistent temperature.
Scrub your list of monthly subscriptions. You don’t realize how many random monthly expenses you have until you look closely. Are you paying for stuff like water delivery, cable, Netflix, landlines, and expensive software? See how many of those subscriptions you can cut. Switch to open-source software, or try to see if you can do without items like water coolers or cable.
Lower your costs for marketing. Some businesses react to a lack of sales by dumping thousands into expensive marketing campaigns to get more customers. While it’s a good idea to draw people in, the panicked throwing of money at the problem is never a good idea. Trust the power of word of mouth, and encourage it for free by asking your faithful customers to leave reviews on sites like Yelp or Google. A cheap way to do that would be to promote the idea on your receipts, napkins, or cups — things that are already a necessary expense. Also, a free promotional tool is social media marketing, where you can network, grab eyeballs, and promote yourself for much cheaper.
Switch to contract labor for non-essential work. The gig economy is in full swing, and you can take advantage. If you have a deli, for instance, you don’t necessarily have to hire and pay a delivery driver yourself when there are options like GrubHub.
Go with less paper and more technology. Try to eliminate your paper and office-supply spending, and make sure all of your data is backed up in the cloud. Tools like Google Docs are free. One wouldn’t think so, but a good IT person can save a company thousands with ideas like these.
Focus on time management. “Time is money” is an old adage, but most people don’t realize how true that is until they are working at their own business. Encourage your employees to maximize their time. See if you can cut the time taken to do specific tasks. Lastly, make sure to analyze your own time. If you need project management or productivity tools, you can go with Trello or Asana, which are both free!
See if you can barter with other businesses. Most small businesses are willing to either negotiate costs or work on a barter system by trading good and services.
Buy in bulk and use coupons. Buy things wholesale as a business. For anything that you can’t buy wholesale, use CouponFollow to find coupons.

How to Drastically Cut Expenses

Perhaps your numbers are a lot scarier than you had anticipated. Before closing your doors, there are more severe ways to reduce costs for an organization. These tactics might affect your operations, but if drastically cutting expenses is the way to go, then they may be better alternatives than closing down. These are examples of cost-reduction strategies to use when the going gets tough:

Relocate your office (or even consider running it out of your home). As far as operational expenses go, sometimes the cost of your location can be the biggest money-suck. Talk to your landlord about getting better terms, or shop around for another location. Some trade or professional businesses may not even require an office. You can work from home until you have enough revenue to get back on your feet.
Ban travel and vehicle expenses. Some companies will even have no-travel periods when executives are required to telecommute rather than incur travel expenses. Also, if you have vehicles or vans because of what your business does, limiting gas and travel or keeping a few of them parked may be how to lower expenses in a big way without alarming employees.
Limit the supply chain or sell inventory. Not all of your inventory may be totally necessary to your daily operations. See if you can move some of your less-necessary inventory or equipment. Consider limiting your supply as well.
An unfortunate option is to reduce payroll. No one likes to lay people off, but there may be other options to lower payroll costs. With all of these options, it’s very important to be open and honest with your employees.
- Temporarily suspend additional hours/pay. Cut back on overtime and bonuses, if possible.
- Consider a furlough. Talk honestly with your employees about your situation. Sometimes, employees will be collectively OK with taking a week of unpaid leave rather than losing their jobs.
- Reduce some of the staff to part-time. Another option is to look closely at which tasks are necessary to your business and which ones aren’t, then reduce the hours of the employees with non-essential tasks on their lists to part-time.
- Cut management salaries. Getting your higher-paid employees to take a pay cut may be a way to avoid layoffs.
- Consider other health insurance options. Look at your health insurance coverage packages carefully, as that can be a huge drain on your whole budget.

Hopefully, cutting payroll or moving is the last option for cutting costs in business. Cost savings can be found in literally thousands of ways; it depends on your personal business and cash flow. But if you want the simplest, easiest way to cut back on small-business spending, visit CouponFollow for all of your spending needs.