How to Save Money When Starting a Home Business
One of the biggest advantages of starting a home business is that you’ll spend less in startup and upkeep costs than you would with a conventional business. For example, you’ll instantly save thousands of dollars a month on leasing an office building, and you won’t have to pay additional money for utilities and professional services to keep your office functional.
However, starting a business is still a financial burden—even if you’re starting it in the comfort of your own home. So if you’re working with a limited budget, or if you’re just trying to start a business as frugally as possible, you need to know the best ways to save money.
Buy Things Used
Though the latest smartphone model or a new car might seem attractive—especially if you want to make a good impression with prospective clients—it’s almost always better to buy things used. Top-rated used cars are just as reliable as new models, and year-old gadgets will give you nearly all the functionality of the top-of-the-line models. Yet, buying your equipment used can save you thousands of dollars.
Shop Around for Software
One of the biggest expenses for home-based entrepreneurs is the software you’ll need to keep your business operational. Depending on your niche and unique needs, you may require things like financial planning software, automation software, or personal productivity apps. It’s tempting to go with the top name in each of these categories, but it’s better if you shop around. You’ll probably find an up-and-coming competitor with a nearly identical product but lower prices (or even better customer service). Don’t sign a contract until you’ve explored all the other options.
Network With Other Entrepreneurs
Spend some time networking with other entrepreneurs, whether you attend professional networking events or just talk to other business owners in your area. Making those connections can help you save money in multiple ways:
- Many small business owners are willing to exchange services for other services, allowing both parties to get something they need for cheaper than they’d otherwise pay for it. You could even work out a long-term contract that saves you both thousands of dollars.
- If a non-competing entrepreneur has a contact in an industry you need to buy from, they may be able to make an introduction—and offer you a discounted rate in the process.
- Even if your new entrepreneurial contacts can’t give you savings directly, they may be able to give you tips that you can use to save money in your own approach. For example, they might tell you about major business purchases they regretted, or tactics they used to save money during a budget crackdown.
Buy Only What You Need (As You Need It)
Many new business owners attempt to buy things for the future, anticipating their needs by buying promotional products, business cards, gadgets, apps, and home office fixtures they think they’ll need to be successful. Instead, it’s better to take your time and address your needs as they arise. There are two reasons for this.
First, it prevents you from making impulse purchases. You’ll only buy things that you truly need, rather than items that catch your fancy at an opportune moment. Second, it helps you figure out exactly what your needs are. It’s unlikely that you’ll estimate your needs accurately during the earliest stages of your business’s development; give it time, and all will become clear.
Leverage Independent Contractors (or Nobody at All)
Human resources are going to be one of your biggest expenditures, so think carefully before you hire anybody. Can you handle your business’s responsibilities all on your own? If so, try to do it for as long as possible. If not, avoid hiring someone full-time early in your business’s development. You can make up any gaps in your workload by hiring independent contractors for part-time jobs; freelance sites like Upwork have become increasingly popular, so it shouldn’t be hard to find someone with the right skillset and price point.
The average business costs about $30,000 to start up, but the average home business will cost far less than that. And if you follow the strategies in this article, you might be able to start a business for hundreds of dollars, rather than thousands. Once you start generating a steady stream of income, you’ll have more flexibility to spend money the way you want. But until then, planning frugally and conservatively is the best way to go.