What is The Most Cost Effective Way To Start Your Business?

Starting a business can be very exciting, with entrepreneurs often having lots of passion to begin and get their new business off the ground. 

But what you have to remember is that a lot of startups and new businesses do not make revenue in their first year or they take a long time before they can cover their initial overheads. 

With this in mind, we provide some key ways to start your business in the most cost effective ways possible. 


Use Affordable Office Space

A typical misconception for new businesses is that you need a big bright office, when in fact any desk will do. 

Some of the most successful businesses to date have started from the dining room table or spare bedroom in their home – and if you have a computer you are often ready to go. This could be working in investments, tech, eCommerce, law, accounting or several other jobs.

Of course, if you are providing a direct service to the consumer such as being a florist, restauranteur or hairdresser, this can be hard to do from the kitchen table. But you can certainly avoid having to pay for office space and being tied in to paying rent and other business rates, especially when the next 6 to 12 months of your business are not fully certain. 


Don’t Commit to Full Time Employees

Again, when starting your business, it can be very tempting to hire full time employees as a sign of  your potential growth and to think big. A new business certainly looks and feels more legitimate if you have full time staff and have aggressive growth plans.

However, full-time staff can be costly and will also take time to manage, which means you could be falling behind on your daily tasks. Using contractors and sub-contractors can be very cost efficient for junior and senior roles, paying them on an hourly or daily basis, rather than committing to a full-time job and all the additional costs that come with employment such as national insurance and PAYE.

It is important to not get sucked into paying high end consultants who can drain you of your limited budget, but certainly for junior staff in the form of marketers, content writers and sales people, this can be a huge and significant saving.


Create an MVP

An MVP stands for ‘minimum viable product’ which is a tried and tested startup approach to building something on a small budget that can validate your business idea. Rather than going too big too soon on a developing an app, software or full scale operating business, consider doing a very basic model on the cheap that is fully functioning. 

Through your MVP you can get people to start using and enjoying your product or service and if there is a demand and it is well received, you are in a strong position to scale it up and grow. 

The last thing you want is to build up a full scale restaurant, app or system and realise that it is has some flaws or is not popular. 


Be Smart With Finances

There are some smart ways to keep your cash flow strong. Most business founders will reinvest their revenue and profit in their first year to get their business up and running. 

Otherwise, there are some financial products which are designed for businesses to help spread repayments over low rates. Consider business credit cards that come with 0% introductory offers, credit lines from your bank or using invoice factoring if you have a business that relies on orders and contracts since this can often be charged at just 1% to 5% APR.

You can also consider borrowing money from family and friends or using savings to get your business started. This has been successful for a number of elite businesses including McDonalds, Amazon and Apple.