Around half of the businesses fail or shut before their fifth birthday.
Why do small businesses fail? What is one of the biggest reasons for business failure? Mismanagement of funds.
It certainly doesn’t mean embezzlement, in fact, in most cases the more money is going out of the door than money coming in.
This again doesn’t mean that you have to sit on the big cash reserves before you start new business. We are big proponents of starting business with limited budgets. In fact some of the biggest businesses in India had started with either limited or no budgets. Click here to read some inspirational business stories of Indian entrepreneurs.
This means that when you are starting a new business, you need to hold your purse strings tightly. Every rupee should be allocated carefully to bring more than a rupee back in the business.
There are some common expenses to start the business, but when you look closely, they aren’t so essential at the start. Here are few examples:
1. Office space and furniture
The one thing which the successful tech companies have taught is that the greatest businesses of all times actually started in small home offices or garages. Amazon, Hewlett Packard, Infosys all began either in garages or in small home offices.
Office space is the biggest overhead expense of any business. Unless you absolutely need an office or a store, you can save thousands of rupees by working from home or smaller offices with secondhand furniture.
No I am not asking you to use the pirated software. These days there are free or low cost cloud options of nearly every type of software are available for your office needs, for example Google Docs, Insightly, Canva, Sendinblue etc. Rather than spending on buying licensed software, you can either use these cloud options for free or with very little burden on your pocket.
3. Hardware or Equipment
The fancy all in one print/scan/copy or a Mac Book or Thinkpad can look cool. But don’t you have a printer/scanner at your home which looks works as well. Don’t you have a laptop or a desktop computer which you are using for some time now?
With the capital in hand, it can be tempting to buy latest cool technology. But the time has not yet come, not so fast. Save your money, keep reserve for lean period or emergencies.
4. Office parties
You would always want to celebrate small success and appreciate your team by taking them for lunch or having office parties, but this will break your budget very soon. There are plenty of other cost-effective perks like giving them work from home once a month or allowing them to wear casuals in office for a day.
5. Advertising and Marketing
Effective advertisements may result in excellent sales and profitability for a company. Many businesses spend lot of money on branding through News Papers, Magazines etc. The fact is digital marketing costs just pennies in comparison with the old school advertisements. Further, the campaigns can be measured easily and the strategies can be reworked if one strategy doesn’t work.
When you are just starting, these low cost advertisements are the better options to get some initial sales.
6. Business seminars and conferences
There are numerous seminars and business conferences which promise to teach you how to be a successful entrepreneur, how to make your business a multimillion dollar one and how to work just four hours a week and run a successful business.
Think dip down, no one knows your business better than you. Don’t waste your money even if the seminar is for free. Remember, there are no free lunches and after all you are spending your valuable time on attending the seminar.
Want someone to guide you? Enlist a mentor whom you know and trust.