Starting a business is easy, keeping it alive is difficult. When you turn your side hustle into an actual business and start hiring staff, things can spiral out of control in weeks if you don’t watch your spending. If you’ve thought about leading a frugal life, you might also be interested in applying the strategies of frugality in your business life:
- if you can barter, do it
- always compare prices
- use cost-free solutions
- automate time-sapping tasks
- avoid cash traps
- reduce waste (time, money, other resources)
- curb costly habits
- try outsourcing first
- have a strict spending diet
- don’t care what others think
- seek effectiveness
With financial experts saying a new economic crisis is just around the corner, frugality becomes more and more important. By understanding how to run a frugal business, you’ll manage to save money while your competitors will keep on overspending.
In the U.S. alone, over 450,000 companies actively participate in barter. Their trade reaches over $12 billion in annual sales. So, no, it wouldn’t be weird to say “hey, I’m low on cash, would you be interested in barter?”. Many other small businesses are struggling to make ends meet, and barter is a good way to get what you need and avoid spending any cash.
#2 Compare Prices
Hiring a new accountant? Ask for at least 3 cost estimates. Buying a new laptop? Check out its price on a few websites. Don’t settle for the first price you are getting. Do a bit of detective work if it could save you some money in the long run.
#3 Use Cost-Free Solutions
Many small business owners buy the same software licenses they used to use when they were employees, but without getting the volume discount their former employer got. For a new business, it makes more sense financially to take advantage of free software solutions (Pixlr, PicMonkey, Google Apps, browser extensions) even if some adjusting time will be necessary.
#4 Automate Time-Sapping Tasks
Use Buffer to schedule your social media posts, use GetResponse to automate your email marketing and boost sales by emailing people after they activate one of the triggers you selected. Visit ifttt.com/recipes and see what IFTTT automations you need.
#5 Avoid Cash Traps
Before signing up for a free service ask yourself if there’s a risk the service will request payment in the future to give you access to what you once got for free. For example: Don’t invest in building a Facebook page if you don’t have the money to pay for reaching your fans, because the organic reach will be too low.
#6 Reduce Waste
Optimize your workflows and production, implement the Kanban system, get informed about what worker efficiency is and how you can achieve it, investigate ways to reduce the time you and your team members waste waiting for somebody else to finish working on something so the next person could intervene. Keep track of what goes into your products and services and what comes out, so you could fix what wastes resources.
#7 Curb Costly Habits
When you’re a small business owner, not reading the fine print of an agreement is more costly than when you are signing up for Netflix. So is taking on too many responsibilities or fixing your employees’ mistakes over and over again. Make sure you know what bad habits you need to kick.
#8 Try Outsourcing First
One of the worst things new entrepreneurs do is hire the wrong people. You can hire too soon, hire the wrong people, expect the wrong thing, pay too much just because you want to be a “good boss”. Outsource for a month the position you’d like to fill locally. You’ll find out how much you can actually pay, what to look for in a candidate, what to expect, and what to ask from your employee.
#9 Strict Spending Diet
Take your projected cash flow into consideration when you are planning your monthly expenses and track every single thing you want to buy. Make sure you only buy what you really need, and that you’re not passing you monthly limit.
#10 Don’t Care What Others Think
Some will say you don’t have a real business if you’re working from home, others that you should change your wardrobe because you can’t be an entrepreneur if you’re wearing a hoodie, not a suit. F*** ‘em! Work from home. Move into an office only if you really must. Keep your personal shopping to a minimum. Don’t buy (or pay for things) just to fit into expensive social norms.
#11 Seek Effectiveness
Pay attention to who is complaining that a marketing tactic failed miserably, check out this list of websites on which you should never run your ads, ask people how much they pay for PPC advertising, content creation and seeding, etc. If you pay attention, you’ll find cheap and efficient ways to promote and run your business.
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