With 80% of UK startups having to close within their first year, financial prudence is essential for businesses striving to be part of that remaining 20%. The more you save, the easier it will be to keep your entrepreneurial venture running for longer. In this piece, we’ll look at some of the ways you can guard against complacency and cut costs whilst scaling your organisation.
1. Explore the possibility of remote working
One of a business’ biggest outlays is renting and maintaining office space. This is even more of a burden if you’re attempting to make it big in a major city, with increased competition driving up prices exponentially. In an effort to cut costs, now could be the ideal time to introduce remote working methods to your business model.
Nowadays, more and more companies are deciding to let their staff work virtually—flexi-working increased by 12.35% from 2012 to 2016, and around half of the UK workforce are expected to work remotely by 2020. An increasing number of companies are abandoning the idea of having a dedicated workspace entirely, and have actually thrived from allowing their employees to work from home.
Remote working offers a multitude of benefits for employees—and therefore businesses—by improving productivity, work-life balance, and morale. With platforms like Slack, Flock and Ryver making virtual communication easier than ever, staff can still collaborate and get all of the support they need from one another. Businesses can even get a virtual office address to maintain a professional image, complete with a receptionist to answer calls and personal mail handling service.
Of course, this kind of setup may not be suitable for all types of business, particularly those that rely on direct physical collaboration. However, by deciding against renting office space—at least for now—you can cut unnecessary overheads, and focus on putting your capital to better use. When you are on more stable financial footing later down the line, you can then think about having a more conventional working setup. Alternatively, you may even find working virtually suits your business and continue this way permanently.
2. Lease a company vehicle instead of buying one
For small businesses who need a company vehicle, wasting capital on buying one is inadvisable if you need to be frugal. Leasing a company vehicle requires a smaller initial outlay, especially from companies who include servicing and maintenance costs in the rental costs. There are relatively few additional payments to make, and VAT can often be claimed back, making rented company vehicles a far more financially savvy choice for budget-conscious businesses.
This option is ideal for small businesses who only use a vehicle for occasional one-off jobs and is a much better option for your cash flow. Fortunately, nowadays the process is also relatively simple with small business owners able to hire a vehicle as well as secure temporary van insurance all through the use of an app on their phone. London-based Cuvva allows you to borrow a vehicle from a friend or family member, offering both car and van insurance from as little as one hour. The policy can also be easily extended via the app if you need extra time.
3. Think carefully about the software you use
Another potentially significant drain on your company’s finances is software costs. Exercise due diligence when it comes to how much you will need to pay for programs and apps that are relevant to your business. Instead of splurging on costly branded software, research any free open source alternatives. For instance, Google Drive, LibreOffice, and Polaris Office are three free office software options out there which make for substitutes to Microsoft Office packages.
Similarly, when it comes to subscription software, you should ask yourself how many programs your employees really use every day? Ascertain what software your business needs on a regular basis, and get rid of any subscriptions that you’re unnecessarily paying for.
In the early days of your business venture, saving money may seem difficult. However, remote working, leasing a company vehicle and opting for open source software are just three of the ways you can bolster your business’ budget, and give you the best platform for sustained success.