The thought of getting your new business up and running is an exciting one, but it doesn’t come without its own set of problems to navigate and overcome. One such issue is the costs that come along with getting your business off the ground. Follow along if you’re interested in learning more about how you can keep your business’s pre-opening expenses as low as possible.
Planning Your Budget: Essentials vs. Non-Essentials
Most parts of life and business require you to be mindful of your finances. When you’re thinking about opening up a business, the same concept applies. You always want to be sure that you’re making a budget that can account for both essentials and non-essentials as your opening day approaches.
Whether you’re looking to hire someone for commercial plumbing service or if you’re shopping around for office furniture, your budget will be your go-to document. Developing a sound budget can require some work up-front but it will serve as a valuable guide as you keep planning your business and encountering unexpected costs.
As you develop your budget, start by thinking about your key pre-opening expenses as they can quickly add up. It helps to begin with your largest costs and those that are fixed and thus impossible to avoid. This can give you even more clarity as you begin to assess luxuries and other non-essential items for your business.
Leveraging Free and Low-Cost Marketing Channels
While modern business operations bring about a number of challenges, there are also several new things to be grateful for. In the past, businesses had to search wide and far to find new ways to market their products and services. However, in today’s modern climate, there are more ways than ever before to make the most out of free and low-cost marketing outlets.
Everyone from local roofers to new restaurant owners can pick up their smartphone and start making content today to drive user engagement and bring in new customers. The revolution of short-form video content across social media channels like Instagram and Facebook makes it easier than ever to have a low-cost marketing tool in the form of a viral video. With the right skills and tone, it’s not uncommon for a small business to blow up overnight by having a video take off on social media.
If you’re concerned about keeping your pre-opening expenses as low as possible, then you should be doing everything in your power to learn about how to leverage social media to your advantage. Free marketing can be found by simply creating a content calendar and sticking to it. Try to make videos and written content that engages with your target demographic. From here you can put in additional work by responding to comments and messages and establishing a brand identity that is warm and inviting.
Negotiating Leases and Contracts to Save Money
In business, most leases and contracts, from land loans to monthly expenses, can be negotiated in one way or another. It takes skill to navigate these discussions, but with the right approach, you can easily find many places to save money. Often you just have to be willing to ask and as the old saying goes, ‘closed mouths don’t get fed.’
As you are building out a budget for your pre-opening expenses, make a separate section to analyze costs that are related to your leases and contracts. You will probably find that you are spending a large part of your money on this part of your business. If you can set a target to reduce these costs by ten or even five percent, then you can often make a considerable dent in the amount of money you have to spend before opening up your business.
A key part of these negotiations is to do your research upfront. If you do the work to determine the fair value of similar business leases in your area, for example, and you can reference this when negotiating for a lower rate, then this will put you in a much stronger position. It will also dissuade you from using an emotional argument, as you can simply reference the numbers that relate to your contact.
You’ll also want to do some work to make sure that you’re talking to the right person when negotiating a contract. Many people make the mistake of asking the wrong person for a discount, only to discover that the person they’re speaking with doesn’t possess the authority to make a meaningful decision on something like a business lease. When you put the right pieces in place before a negotiation, you will be surprised by how simple the process becomes.
Utilizing Second-Hand Equipment and Furniture
Most pieces you acquire for your business, from cozy furniture to stainless steel casting equipment, can often be found by looking in the right second-hand stores and supply depots. Many people never even consider this idea, instead opting to pay double or triple the price to get new equipment that achieves the same function as something with some use. There are certain instances where you’ll want to buy new equipment, but never discard the idea of going second-hand for much of your business needs.
Again, this is an instant where your budget for pre-opening expenses will provide some valuable direction for you. If you know that you only have a limited budget to spend on furniture for a new store, for example, then you can begin to scour second-hand dealers. While every business has different needs, there’s no shame in exploring your budget to see how you can maximize it before spending more than you can afford on new equipment and furniture.
Choosing the Right Time to Launch
Timing is everything in business. If you choose the wrong season to launch, then you may have to pay for many more expenses than imagined. For example, if you have an outdoor business in a cold climate, then you will need to account for weather-related costs such as heating oil and insulation. Taking stock of these kinds of conditions before you open your doors is one of the best ways to avoid any potential pitfalls in your finances.
Define your pre-opening expenses in relation to your proposed opening date. Using a chronological approach like this can help you structure your purchases in such a way that you don’t run out of cash flow at the worst times. You can also put a purchasing schedule and calendar in place before you get running to automate the money that’s going out and coming into your business accounts.
Working with a certified financial planner and accountant will definitely help you throughout this process. The right person can help you predict potential financial problems before they get out of hand for you and the rest of your hands. They can also serve as a warning when you are approaching a pivotal opening date where you may need to expend a lot of available funds to upgrade your business.
Streamlining Processes with Technology
Any business from a clothing designer to a business providing custom powder coating can benefit from technology in a major way. Not only can technology help you to save money, but it can also save you valuable time through the process of automation. Once you have your technology systems in place you will be amazed at how they can help keep you and your team on track with regard to your finances and your upcoming deadlines.
Take a certain portion of your pre-opening expenses and set them aside to make sure your technology is up to speed. Many people in the modern world have come to expect a certain level of engagement with business both online and in the physical domain. Taking care of both of these elements of your business can be tough, but it will provide a strong impression for your target customers.
Hiring Freelancers vs. Full-Time Employees
Whether you are working in an online business or an auto repair shop you’ll have to decide if you want to hire freelance workers or have a full-time staff. Both approaches have their advantages, and your budget will likely decide how you choose to move forward with building out the right team for your business.
When you have limited pre-opening expenses it may be wise to hire out freelance workers, as you can pay them as needed and keep more of your funds available for investment in other parts of your business. This will also allow you to build the kind of income and momentum you may need to hire more full-time staff members in the future.
Other businesses may want to get the right staff in place from the start. Having the same people in the office each day can reduce headaches and problems with your business systems. When you have to keep hiring new workers in a freelance capacity, you often end up wasting time on training and correcting errors due to workers not being familiar with your way of doing things. Regardless of your choice, taking some time to decide your ideal hiring process will save you lots of money as you get your business off the ground.
Seeking Out Business Incubators and Grants
As you open up your business, you should be seeking out other forms of funding beyond loans. Many local and national funds provide startup money in the form of grants and other programs. Every business from a bail bonding service to a new movie theater can benefit from these programs and seek out funds that may otherwise have seemed impossible to obtain.
You can start this process by talking to your local chamber of commerce or other business organizations in your area. Most cities have funds that exist to stimulate the local economy and help businesses get the start they need. If you aren’t having success here, then you can expand your search online by reaching out to other companies in the same industry. This process will often reveal unique funds and grants that exist to support businesses and keep them running long after opening day.
Managing Cash Flow During the Setup Phase
Cash flow is important regardless of the type of business you operate. The last thing you want is to run out of available funds when you set up your business. Businesses that deal in physical cash, such as a restaurant or local catering company, will want to have even more streamlined processes for cash flow in place before opening.
As you chart out your pre-opening expenses, don’t forget to set aside some funds to be available as liquid funds. Too many businesses over-leverage themselves on loans and credit only to realize they have much less cash on hand than they need. Some business models may be able to function with limited cash flow, but most will suffer if they don’t have access to capital, especially at the start of the business.
DIY Approaches to Design and Decor
Many pre-opening expenses are hard to avoid when it comes to opening up a physical store. There are many fixed costs associated with things like materials and infrastructure. However, you can always introduce a bit of elbow grease and ingenuity to cut down many of your design and decor costs.
Whether you’re in the cosmetic industry offering lip injections or if you’re opening a specialty food store, there is no shortage of DIY design ideas to be found online. Try to implement ideas that are solid and timeless as opposed to those that will need updates in the near future. You don’t want to be lazy about your design features, but this doesn’t mean you need to throw a bunch of money at the problem either.
The process of working to keep your pre-opening expenses takes dedication and constant analysis, but you will surely see positive returns as you get closer to opening your new business. Stay on track by using the tips and tricks above and you’ll be in a much better position once your business serves its first customer.
