For any business, cash flow is king. Keeping costs to a minimum means higher profits to reinvest and lower investment burn rates. Young businesses are most likely to need to save cash since most have a more limited budget than more established enterprises, and are more sensitive to periods of loss.
As conventions of what a business should be and how it should act have worn away in the last 10 years, more and more innovative products and services have come to market that allow a young enterprise to keep costs but aligned to business growth.
Here are some ideas as to how your business could match needs with growth:
Co-working spaces allow you to have an office in a convenient location of your choice, when you need it. The idea is that you benefit from having an office, without being tied down to a costly long term business lease.
Most co-working spaces offer use of bookable rooms for private meetings, reception/waiting areas for your customers, kitchens and other open spaces to meet colleagues and network with other business owners, and private niches where you can lock yourself away when you need to concentrate.
As you grow and bring on more employees, you simply book another desk in the same office.
Many co-working companies have more than one location. That lets you move around. You might decide to choose one office location permanently and work there throughout the week, or you might choose to work at different locations on different days.
The ability to receive mail at an address allows you to give a business postal address to your customers (rather than using your home address).
Equipment and computer hire
Specialist equipment, even a work computer, can bea large upfront cost. If you have several employees, the total cost to your business of these fixed assets can be high. Equipment might also need unforeseen maintenance.
Leasing rather than hiring gives you an immediate cash flow advantage. Although the leasing costs are usually higher than buying over the long run, the flexibility in the short run of only having what you need is a much greater advantage.
If your equipment breaks down, or if it is no longer suitable for your needs, you can simply end the lease and hire something else that meets your needs better.
Legal document templates
Most new businesses don’t need specialist legal help. Their initial legal needs are the same as any other new business.
Pre-written legal documents allow new businesses to put in place key contracts without having to pay high lawyer’s fees. Net Lawman, an online retailer, estimates that start-ups might need 6 or 7 documents straight away, which would take a lawyer many hours to write at a large upfront cost.
With an online retailer, you simply find the document you want, download it, edit it to your requirements and have the other side sign. You don’t need to involve a lawyer, but if you want peace of mind that your contract is sound, many document retailers are affiliated with a legal firm who can check the contract for you.
Because you do much of the upfront work, you can keep the amount of time a lawyer spends on a document down.
There isn’t a legal document template for every need, but for those situations that most start-ups face, you’ll be able to find what you need from an online document retailer.
Cloud accounting software
Most new businesses just need simple bookkeeping and accounts preparation services.
Cloud accounting services (where the software is hosted online) allow you to skip sending every receipt to your accountant, and record transactions yourself. A suite of mobile and desktop apps mean you can do this whether you are on the road or in the office.
At the end of the quarter or year, you can press a button and have the software produce accounts and tax returns for you.
If you need more help, there are many firms of accountants who offer subsidised price services that rely heavily on cloud accounting software. These are “half-way house” services where you accountant might help you with cash flow forecasts or finding grants, but you retain the ability to log in to the accounting software and see a real time balance sheet or P&L.
Matching the costs to requirements
The key for a small business is flexibility, and making sure there is no surplus capacity. You don’t want to take on more costs now just because you think that in six months’ time you’ll be able to benefit from that extra capacity.
Start-ups need to be agile and lean. These sorts of services can help your business be exactly that.