Costs can very often break a new business as it will make it that much harder for it to reach a point where it is sustainable on the strength of its cash flow alone. That is why it is extremely important that every new business is as lean as possible, and does not take on costs that they can’t handle or expenditures that they can manage without.
Although you may feel that your business is already pretty lean and even frugal in some cases, odds are there are still going to be ways that you can cut costs. In particular you should try to:
- Shop around for quotes on necessities
While you aren’t going to want to attempt to do without necessities such as electricity, internet, telephones or insurance – you can try to find better deals. By shopping around for quotes on items that are necessities you can then have the option of switching your providers, or at very least could approach your existing provider and try to negotiate a better deal.
- Review your long term and short term debts
Assuming your business has long term and short term debts, you should review them – paying close attention to their interest repayments and how much it is costing your business. If possible try to shop around for better rates as well, and approach your lenders to negotiate better terms. Also in some cases it may be a good idea to convert some short term debts with high interest rates into long term debts with lower interest rates instead, through credit card consolidation loans and other means.
- Negotiate with suppliers
Most businesses deal with multiple suppliers and you’d be surprised how much you can end up cutting your costs if you negotiate with them. Generally suppliers will be happy to provide you with discounts if you increase your purchasing volume (i.e. buy more stock in advance) or guarantee early payments. So long as it doesn’t affect your cash flow too badly, it may be worth taking a small hit to reduce overall costs.
- Look into purchasing second-hand equipment
If your business has any equipment needs it might be worth at least considering the idea of purchasing it second hand. As a rule of thumb the price of second-hand equipment is significantly lower, and so long as you make sure it is in good working order in advance you may not even notice any practical difference between it and one that is brand new.
If you haven’t already started to take any of the steps above then you should make it a point to start sooner rather than later. The earlier that you can cut your costs the better off your business will be in the long term. As your business revenue begins to grow and it becomes sustainable and then profitable you can consider loosening the belt somewhat, though at the end of the day saving on costs through these methods is never going to be a bad thing.