Top Ways Small Businesses Can Save Money in Their First Year
By Nick Djurovic
CEO of Digital Dot New York
Before you launch your small business
If you are yet to launch your small business, it would be best if you first conducted feasibility research. Regardless of how passionate you are about your business idea, some ventures aren’t feasible. Even if you have already set up your business, researching to see if your idea has legs is wise before investing more funds into growing your business. Small businesses generally have low operating costs, and you will invest most of the money upfront. Performing a detailed analysis of your business plan can help save you from making some expensive mistakes.
Six ways entrepreneurs can save money in their first year
The first year will be critical for any business. Depending on your financial runway, your initial investment will probably carry you for the first twelve months. This should give you some time to get your business up and running. However, it’s still essential to save money wherever you can and cut down on operating costs. Here is how to make that happen.
1. An accurate financial plan is critical
During the first year, you must count every penny you spend. An accurate financial plan can tell you how much wiggle room you have and what you can afford. Try not to make any unnecessary purchases. When you are just starting, it may feel like you lack all sorts of things, from office equipment to software subscriptions. However, there will be sales, second-hand options, or budget-friendly alternatives for most things you need. Shopping around can save you more money than you think, so don’t be quick to buy something just because it’s on sale.
Of course, securing a small business loan or grant can give you enough financial breathing room to make some much-needed investments. Regardless of your guaranteed funds, it would help if you were very frugal when spending any money during your first year. Therefore, our primary advice would be to create a lean financial plan and stick to it.
2. Use cost-effective ways to connect to your local community
When you are just starting, customers from your area will be the bread and butter of your business. Attracting local customers doesn’t necessarily have to include renting expensive billboards or other expensive marketing gimmicks. Look for cost-effective or free ways to connect to your local community:
- Host events. You don’t necessarily have to do everything yourself. See if any events are happening in your area, and contact the organizers to see if you can attend with a small booth or stall. Alternatively, you can partner with other local businesses and host or sponsor an event. In this case, it would be a good idea to contact local media with a pre-assembled press kit so you can get some much-needed coverage.
- Invest in local SEO. If you are willing to invest in marketing, we suggest you go digital with a strong focus on users from your area. Local SEO can do wonders for small businesses that hope to pop up on local searches.
- Participate in online discussions. Connecting with the local online community and joining discussions on online message boards will only cost you your time. Let people know about your business and that you are there to answer any questions they have.
3. Create an affordable marketing strategy
No small business will have a marketing budget comparable to that of big businesses and industry leaders. Instead of trying to replicate what they are doing, a small business can save money in their first year by creating a laser-focused marketing strategy to achieve specific goals. Do extensive research on your ideal customer and only target users from that demographic with your marketing.
Additionally, the best places for small businesses to advertise are social networks. However, this doesn’t mean you should spend money on paid advertising and hope everything turns out for the best. Measuring social media ROI is the best way to ensure it’s worth the investment. If you realize that what you are doing isn’t giving you the results you had hoped for, you can easily make a course correction in your social media advertising.
4. Optimize supply and distribution
You’ve undoubtedly heard of the global supply chain disruption for the last two years. Unfortunately, it doesn’t seem to be slowing down, and we have already seen the devastating effects it can have on small businesses. Business owners mistakenly believe there are only two options: absorbing the rising costs or passing those expenses off to the customer. However, if you optimize your supply chain and rely on more than just one supplier, you will have an easier time mitigating delays and finding affordable shipping options.
5. Look for small business programs
One of the best ways entrepreneurs can save money in their first year is to search for small business support programs. If you look around, you can find free legal services, marketing support, and finance consulting services – all of which can save you some much-needed money. You can also contact other small business owners from your area to inquire about affordable programs you can apply to.
6. Automate whenever you can
It would be best if you didn’t view automation as exclusively reserved for big businesses. Nowadays, many affordable software tools can help you automate mundane tasks such as data entry, email templates, and report generation. This can save you tremendous amounts of time and money that you can put to better use elsewhere.
If you set up your business to be frugal and cost-effective, your first-year operating costs will be lower, but you will also have an easier time in the future. Implementing money-saving policies from the start can help your business become financially sustainable in the future. Therefore, you should do your best to implement the six ways small businesses can save money in their first year we outlined in this article.
Nick Djurovic, CEO of Digital Dot New York, is passionate about SEO and digital marketing. Nick loves contributing as a guest author on business blogs and sharing his skills regarding business ownership and creating a successful corporate culture. When he isn’t researching the inner workings of social networks and search engines, Nick can be found enjoying lazy weekend afternoons with his two dogs.