Startups and small businesses are great for both entrepreneurs and the local economy. According to Mark Roemer Oakland, to ensure the success of your startup you should optimize the cash flow and regulate costs as efficiently as possible. Let’s look at a few ways to do that:
- Plan and prioritize – Your startup will need a lot of things and you can probably come up with a long list of startup costs that will bankrupt you within a week. The simple trick to managing that cost is to figure out what’s needed to continue operations as effectively as possible while bringing down additional costs at the same time. A business plan will help you achieve that.
List down your startup costs with items that are essential for the establishment and sustenance of your business. It can include everything from POS and office supplies to the salary of employees and furniture. In the end, you can come out with realistic estimations that help you forecast and track the health of your business and will allow you to manage upfront costs.
- Track everything and some more – A business is established to make money. Hence, you need to track all expenditures, even the most insignificant ones. From advertising and lawyer consultation to the restaurant bill during the client meet. Nothing is too small to not be included in the books.
With a detailed record, you can track all kinds of expenses and do away with unnecessary ones. Moreover, the record can also be financial and legal proof in certain circumstances and can help you in tax deductions at the end of the year. Moreover, there are dedicated software that allows you to achieve that with detailed tracking that even includes warehouse and inventory management.
- Hire the right people – Planning your workforce is also quintessential for managing your startup costs. Your staffing needs should be mentioned in your business plan and that should tell you about the gaps in positions that need to be filled in the future. You need to start at a steady pace and hire pragmatically. You can’t afford to hire everyone at the beginning. Only hire essential staff that would be utilized fully and doesn’t burn through your cash flow.
Moreover, for some activities, you can outsource some of your burden to contractors and freelancers. This saves you the additional costs that you need to pay full-time employees and get things done quickly without any loss in quality.
- Bulk purchase – Sometimes a large upfront cost can also save you a lot of money in the long run. For instance, software licenses, product materials, and office supplies are recurring costs that build up over time. In these cases, large purchases can make more sense since they can come with a significant discount. It’s especially true for software licenses. A yearly or lifetime subscription will bring down your monthly average cost to half or lower compared to the regular monthly subscriptions.
Mark Roemer Oakland suggests that you implement these methods to cut down on startup costs and optimize them for your new business.