There’s a common saying that something like 80% of new businesses fails within the first year. Couple that with another statistic that says 82% of small businesses fail due to cash flow issues and it should be apparent to you that money plays a really big part in business. If you want to start a business you may discover that things look very different from the inside. You may have the best-laid plans it helps to be prudent and here are some things you can save money on when starting a new business.

Used equipment

This is the best thing, especially for a new business. If you have not operated in the market before there are many things that you do not know. You also do not have the advantage of an existing customer base to offer somewhat guaranteed cash flow. Used equipment can offer you the same productive capacity but at a lower cost. The saving could mean extra cash flow that your business will surely need.

Virtual office

I don’t think you will need much convincing of this after the last two years with lockdowns rendered offices at the very least partially redundant. Office space needed a whole rethink for many businesses. You can save yourself a lot of trouble by using virtual offices in co-working spaces to get yourself started. This will give you all the office facilities at a fraction of the cost and without the commitment of owning and managing office space.

Open-source software

Good software demands payment. Unless of course, you are willing to use bootleg software. All things considered, this is never a good idea as it has security risks among others. For every beloved software experience, there is an equally competent open-source version of it that can get things done. In the long run, you will have a better experience and save money along the way.

Shop for suppliers

Suppliers are key to your business whether you are a manufacturer, wholesaler or service business. One thing you must do early in your business is learning to shop for suppliers. The supplier relationship is not only about money but it helps to know what’s available and how it compares to what you have or intend to use. The right supplier or service provider could be the difference between happy customers and unhappy customers.

Identify discretionary expenses

One of the master skills in business is classifying your expenses. Many expenses will come to you. And they all likely seem like good ideas. With a little experience, you will learn which ones are essential and which ones are discretionary. Figuring out which ones you can do without and following up by staying away from them will help you massively in managing your financial position.

Outsourcing

I’m a huge fan of outsourcing, especially for new businesses. It sounds crazy to want certain things to be handled outside the business but it may well be the best thing you can do. The idea is you get the expertise without having to invest in it. The investment comes in the form of both time and money. Where there is a viable outsourcing opportunity you should take it unless it is a critical business function.

Incremental growth

The goal of everyone in business is to grow. And while we all love to wake up on day one and have a million customers that are not only highly unlikely but not be a good thing. Not all business ideas are easily scalable so such a shock would result in you likely disappointing some customers. Understand the importance of organic and incremental growth in business. It’s what you learn during growth that matters. So you should be cautious about sinking money into schemes that promise you rapid growth early on.

Keep an eye on your cash flow

I think everybody in business has an understanding of the concept of profit. Cash flow, though just as or maybe much more important is not as widely understood. So make an effort to learn about cash flow and understand why it’s so important. Understanding the implications of decisions like offering credit and making annual payments on cash flow will make you a better decision-maker.

Starting a business is one of the most daunting experiences you will ever go through. Having your finances in order will certainly go a long way towards easing the process for you.