SMART Tips on How to Start a Business Without Any Debt

By David S. Chang

Starting a business can break the bank if you aren’t smart about it. According to Camino Financial, startup costs can range anywhere from $5,000 to $125,000. Even with the internet helping startups lower costs, many business start-ups owners still find themselves in debt. Good financial management is the key to success in any business. If you cannot control your spending, your business is likely to fail. This is the main reason that new businesses struggle to make it past the first year.

Lending money to small businesses and startups is a billion-dollar industry. While taking out a loan can help in the short-term, often it is the very debt itself that causes a business to fail. That’s why smart business owners do whatever they can to get started without debt. Here are SMART tips where you can start a business without any debt.

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Wages and Benefits – Hire the Right People or Use Freelancers

Every business needs employees and they need to be paid. So, wages and benefits will be one of your highest costs and you can’t avoid it. But there are ways to spend less on your staff costs. Firstly, you need to hire the right people. One good employee is worth 2 bad ones. If you get the best people in, then you won’t need to hire as many employees.

Try to look for people with multiple skills so they can fill more gaps in the business. You need to think about why you are hiring people as well. If you hire people for the sake of it, then you are wasting money. You should only hire somebody if there is a skills gap in the business that you need to fill. 

Freelancers can be a great option if you’re looking to save money. Permanent employees may not always be ideal when you are starting your business. You can hire freelancers on a short-term basis. This way you are not committed to providing full benefits. Once you are able to generate stable revenue, then you can look at hiring permanent employees.

Technology Costs 

All businesses rely heavily on technology. It can improve productivity and save you money, so you need to invest in it. Technology costs cannot be avoided completely, but a lot of businesses spend too much. Paying for software and equipment that they don’t need is a common mistake that people make.

If you are not a technology expert, it can be hard to know what your technology needs are. That’s why you should use Managed IT Services to help you buy and implement the technology. They will have a better idea of what you need to pay for and what you don’t. IT services can also perform routine maintenance which will reduce expensive breakdowns in the future. 

Office Space 

Rent is often the biggest expense for a business. You will be paying hundreds if not thousands of dollars every month, depending on the size of the office. But there are some simple ways to reduce that cost. Negotiating on price with the landlord is very important. They would rather keep you in there instead of finding new tenants. That means they may be willing to give you a discount. You should also think about your running costs.

If you are using a lot of energy, then you are wasting money. But making simple changes can save you a lot of money in running costs. Using LED bulbs instead of regular ones, for example, will cut energy usage. Try to encourage your employees to be more aware of energy use as well. 

Use Free Online Tools 

To save money, make the most of all the freebies that you can. Sites like Lucidpress offer some great free invoice templates. Google Docs is a free tool that allows you and your team to collaborate and share documents.

Messaging platforms like Slack offer excellent real-time communication. Slack can be far further efficient than email for a team. Before you pay for an app or tool, always check if there’s a free version available first! When your employees can collaborate seamlessly productivity will increase. 

Budget properly 

It’s impossible to save money if you don’t have a solid budget in the first place. With this in mind, ensure that your budget is thorough. Having all your expenses mapped out will help you to see where you are overspending.

A budget can also help to determine accurate profits. If you need a little help, you might want to look at some budgeting apps. These tools can be handy to track your accounts and send alerts when you overspend.

Don’t Quit Your Day Job

Many budding entrepreneurs make the mistake of quitting their day jobs to start their business. This often leaves them with no choice but to take out a loan to fund their business start-ups costs. If it doesn’t violate your current work agreement, stick with your day job and embark on your start-up part-time.

Doing this would allow you to grow your business slowly while covering costs with your existing, reliable income. While it might involve burning the candle at both ends for a while, this is a sure way to afford even an expensive startup without any debt.

Building a Business from Scratch Using “Small Bricks”

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Too many startup entrepreneurs try to build their business with big bricks. They invest in large expensive office spaces right off the bat and hire a whole team of staff before they’re ready. There’s no way to do this without taking out a loan unless you have someone backing you or have saved up enough.

Work on building your business slowly using small bricks. Start at home where you don’t have to pay a cent and work with freelancers rather than full-time staff. Entrepreneurs have large dreams. Large dreams don’t require large bricks. You can still build your large dream of taking small steps.

Not only will you save quite a bit in costs, but you will also find that your original business idea may have to be altered. Start with small bricks, test and measure the market response, then iterate quickly and improve. As revenue grows, you can continue to invest for future growth!

Lease or Rent, Don’t Buy

One of the biggest startup costs is office space, computers, software programs, copy machines, business equipment, and even transportation. To keep your costs low, look at leasing or renting the equipment instead of buying it.

Depending on your business, you may be able to bootstrap and fund the lease costs with incoming revenue. Need a vehicle for your business? Many auto dealers can offer a good lease deal. Even if you have bad credit, companies like OTR offer bad credit truck leasing.

When it comes to office space, don’t lock yourself into a long-term lease. You can work with companies like WeWork or Regus for month-to-month or even on-demand office space at affordable rates. Renting communal offices can give you the same big business brand while limiting your costs.

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That’s why you need to cut costs wherever you can. Improving productivity and eliminating waste in your business will help you to save a lot of money. But if you really want to cut costs, then you need to look at the big expenses. Small savings won’t help you if you are still wasting money on the big things. These are some of the biggest business expenses that you can cut back on. 

David S. Chang

Award-Winning Entrepreneur, Wealth Manager and CEO | Chief Editor, Author, Keynote Speaker, Consultant | Political Consultant | Army Officer National Guard | Living To Fulfill Needs, Solve Problems, and Live Passionately!


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