Launching a business is an exciting opportunity for you to build a strong financial future and perhaps do something you love. If you’ve developed a solid plan, you know that there is a lot of work to do to get your online business open. There are also a lot of costs, and that could mean you’re worried about how much you’re spending on a business that has yet to make you any money.
Spending money to make money is often necessary. Yet, there are ways to reduce what you are paying to help ensure you’re using your financial investment wisely. Before you even launch your business, consider these tips and tricks for saving money when starting an online business.
#1: Create a Business Plan
You don’t have to spend money to hire a professional to do this. There are multiple business plan templates available readily online. Yet, this is one of the most important ways you’ll avoid spending money where it’s not beneficial.
A business plan allows you to see what it’s going to cost as well as what you can expect in return. Use your business plan to:
- Create a list of costs you’ll likely need to pay
- Outline what the profit margin is for your company
- Allocate time to organizing the structure and function of your business
By having this direction, you can avoid spending money on unnecessary costs, too many initial materials, and poor inventory control.
#2: Choose the Right State to Open Your Business
As an online business, you have the freedom to select which state to launch your business from, and it doesn’t have to be where you live. Here’s why this is one of the best ways for you to save money when launching an online startup.
Some states have far lower startup costs and reoccurring business administration costs. Things like filing your Articles of Organization, obtaining business licenses, or paying taxes differ from one state to the next. However, you’re an online business, which means you may be able to pick a state that’s financially better for your company.
For example, if you choose to open an LLC in Virginia you can reduce your costs due to the lower overall startup cost environment. Even if you live in Texas, you can set up your “foreign LLC” in Virginia using a registered agent in that state. It doesn’t impact how you operate, but it can reduce costs. Do some research to find which state offers the lowest LLC formation and management costs.
#3: Start Marketing Your Business Through Social Media
You could do some serious financial damage by creating an expensive website, pay-per-click ad campaign, and other marketing. Or, you could test out your business online and develop a strong, healthy business model before you launch fully. Social media marketing is more affordable (and even free if you do it yourself initially).
This can help you to:
- Learn who your target customer really is
- Devise clear marketing language and keyword focus based on what resonates with your buyers
- Work out the kinks in any shipping or pricing you offer
- Help to establish your brand
- Allow you to easily make changes to your business products or processes before you dive into a full-scale operation
Test everything out on social media as a first step. If you gain traction quickly, you can then move on to building a website and developing a marketing campaign.
#4: Do It by Yourself
Hire an attorney and a tax professional if and when you’re dealing with a large business or a complicated legal structure. You don’t have to have these professionals available to you, though, if you’re not in significant need of legal advice. Though you should turn to the pros as your business grows, you can do a lot of the work of starting your online business yourself.
For example, you can file all of your LLC paperwork yourself. Research how to set up an LLC in your state. Use the free templates and tools available to you. This allows you to avoid all of the costs associated with starting and formalizing your business.
#5: Design a Free Logo
Another big part of launching your online business is to create a brand. Since you’re not shaking hands with customers walking in the door, you need a clear, easy to identify brand that helps your company’s personality stand out. You want people to remember you.
One of the best ways to do so is through a brand image, like a logo. Logos can be quite simple or elaborate, but you don’t have to pay a marketing firm to create one for you. Use one of the free logo tools available online. You’ll do a bit of work here coming up with an idea and then perfecting your logo, but this could save you a lot of money while helping you launch your business successfully.
#6: Keep Those Receipts
The cost of doing business could be used to offset any profits you make and have to pay taxes on. You cannot just assume how many business expenses you have, though. Rather, you need to have a well-documented system that shows what you’re spending money on. This is something that you can achieve easily by using a receipt management app while constantly updating and keeping track of your expenses.
Do you need to buy inventory? Perhaps you are spending money on a marketing campaign. Do you have costs associated with a website? All of these are business expenses that could help lower your taxes later. Keep receipts for anything you spend money on.
Also, use those receipts to help you track what you’re spending. If you buy an inventory of raw materials from one supplier, you can easily compare costs among various suppliers easily. This can give you insight into what you are spending money on and where you may be able to trim back costs.
#7: Outsource Tasks as Needed
You just want to do everything yourself to save money, but if you don’t have the time to manage some of those tasks and just keep putting them off, hiring someone can help and may be well worth the cost.
However, you don’t have to turn to a big firm for the services you need. Today you have the option of hiring a freelancer for almost any task you can think of. For example, you can look for a freelancer who can help you create social media posts, take photos of your products, write keyword-researched copy for your website, or answer calls from your prospective customers. It’s still a business expense to write off, but it could be far less expensive in many situations.
#8: Find Business Discounts
Companies today want your business and will often go out of their way to provide you with incentives to use their services. You just have to ask for a discount.
For example, you may want to join a networking group online or a professional group within your niche. They may share discounts and tips for reducing your operating costs within your industry. If you need to turn to a supplier for a product, reach out to their customer service and ask them for a discount.
Compare companies carefully, too. You’re going into business, which means you’ll need to broker some deals. Compare companies in what they offer and then ask for a discount if you have two sources with vastly different rates.
#9: Go with Used Equipment
One of the most expensive purchases for startups is the investment in equipment. It can be hard to rationalize spending $10,000 on brand new equipment right out of the gate. Look for used equipment instead. You’ll find it available through professional buy and sell liquidators, auctions, and even Facebook Marketplace. Do all your due diligence to ensure you buy the right equipment at the best price. Ensure it works for you, too.
Buying used can help you to get many of the assets you need quickly to get your startup moving, but it’s also very easy to overspend on used equipment or to buy too many pieces. Start slow and build up based on what you need to launch and manage your business initially. Over time, you’ll have the financial resources to support your growth with new equipment.
#10: Use Free Software Initially
You can find a wide range of tools online to help you with budgeting, tax management, and accounting that cost you very little. Some are even free. When using these services to start your business, always focus heavily on learning as much as you can about the service:
- Is it completely free to use?
- Does it have access to your company’s financials or data?
- What type of security is in place?
- What do other users of it like or dislike about it?
- How easy is it to migrate to a paid version later?
Start Your Business But Save While Doing So
Starting a business is worth it for many people, especially when you incorporate a few helpful ways to reduce your costs along the way. As a business owner, you’ll want to keep your eyes out for simple and affordable ways to grow your company, keeping more of what you earn in your bank account.