How to Save Money to Start a Business
1. Create a Budget
The first step to saving money for your business is creating a budget. Developing (and following) a budget is one of the most effective methods of saving money to start a business. Successfully budgeting helps you keep your money organized and serves as an outline of the amount of money you actually have to spend each month to be able to save.
It's important to remember to be frugal wherever you can to save the most cash possible while also being realistic about the amount of money you need to be comfortable.
Create a budget with these easy steps:
- Determine the amount of money you bring in every month.
- Calculate your expenses, such as rent, car payments, and utilities.
- Identify any discretionary spending or amount spent monthly on unnecessary items and activities.
- Calculate the average amounts spent on groceries, clothing, and other items monthly.
- Set limits for your spending and eliminate frivolous, discretionary spending
- Save money and grow your savings.
2. Pay Off Debt
The next step is paying off debt. Whether it’s student loan debt, car payments, a personal loan, or a mortgage — the amount you pay monthly toward your debt is money you could be saving to put toward starting your business.
Work within your budget to prioritize paying off your debts first then you can invest your cash into building a successful business.
Tips for paying off debt:
- Pay off the most expensive debt first.
- Pay more than the minimum balance required.
- Don’t acquire more debt by buying a house, car, or other expensive items.
- Use additional funds, such as work bonuses, to help pay off the debt instead of using it for recreational purposes.
3. Utilize Technology
There are quite a few ways to utilize technology to save money for your small business; utilizing the free or inexpensive resources available online can save you valuable capital. One way to do this is to opt for a home office and work remotely. If possible, starting your business from home can save on office expenses and decrease your overhead costs.
In addition to working remotely, do some research on the free online tools for small business you may be able to take advantage of. Document management tools, business apps, email marketing tools, and productivity management software are just some of the available tools for small businesses online.
4. Start Small
If you’re like most entrepreneurs, you have big dreams for your business. While this is a great mindset to maintain, starting small and working toward the milestones you have in mind is important to saving money and building a strong foundation for your business.
Tips for narrowing your business idea down to the essentials:
- Be honest about your strengths and weaknesses, then structure your business around your skill set.
- Identify features and inclusions that aren’t necessary to the product or service that are costly.
- Be conservative with your budget, acknowledge where you could be more frugal and still start your business off strong.
5. Only Spend Money on Essentials
Refer back to your budget, and review unnecessary spending habits, otherwise known as discretionary spending. Keep in mind that any money you spend on nonessential items and activities is money that you aren’t saving to put toward your business.
Discretionary spending can mean dining out instead of cooking at home or a bad shoe shopping habit. To identify your discretionary spending habits, take a look at your bank statements, and calculate the amount spent on nonessential items and activities. Pay close attention to repeat purchases, as these are spending habits you may not have been aware of.
6. Use Free Business Tools and Resources
There are plenty of resources available for someone interested in how to start a small business without a lot of startup capital, but finding and utilizing free business tools and resources is one of the best ways to save money as an entrepreneur.
For example, one of the most important steps in starting a business is developing a business plan and creating a logo. By using this free business plan generator and free logo maker, you can easily create a business plan and logo for your startup without paying a cent.
Some of our favorite resources are the Small Business Development Center (SBDC) and SCORE; both offer invaluable information about starting a small business as well as local resources and need-to-know information pertaining to your state.
For more free business resources, visit our business center.
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