As the owner or manager of a startup, do you often brainstorm ways to reduce expenses? It’s human nature to try and figure out ways to spend less and earn more, but many people come up empty-handed when searching for effective, practical ways to slash the outflow of capital in a business operation. Fortunately, there are numerous ways to achieve this worthwhile goal, including outsourcing one or more key functions, using fleet management systems to save money in a transport business, setting up a virtual organization to minimize overhead, selling digital goods to avoid the cost of maintaining inventory, creating hand-made goods to keep production expenses low, and dozens more. If you want your startup to be lean and mean, before you put a startup on the market, consider the following techniques for reducing cash outflow.
For small, new organizations, outsourcing is often a necessity. But even when it’s not, it can save money for entrepreneurs who operate with skeleton crews. That’s why it comes as no surprise that many startups hire outside firms to handle their accounting, human resource, legal, security, and marketing functions. What are the most commonly outsourced services in business? Payroll, tax preparation, and legal help are at the top of the list for most new entities.
Fleet Management Systems
Fleet management systems accomplish dozens of things at once and help transport companies make on-time deliveries day after day. One way they help keep costs down is through the use of ELD (electronic logging devices) compliance solutions. It’s important to avoid costly fines and penalties that result from drivers exceeding maximum hours on the road. Fleet systems include ELD programs that help companies maintain compliance in every geographic region and thus minimize compliance costs. Connected operations are more efficient, feature better communication between drivers and dispatchers, and let owners know when vehicles need maintenance or when road conditions become hazardous.
In the early days of the computer revolution, accounting firms pioneered the concept of the virtual firm, namely a company with no physical presence and team members scattered over vast geographic areas, connected only by their digital networks. Since those early days, nearly every industry includes companies that work in the same way. Owners of e-commerce businesses often operate this way and keep expenses down in the process. Nowadays, professionals like lawyers, engineers, management consultants, psychologists, doctors, and others turn to the virtual structure as a way to save money during the startup phase. Later on, many rent office space and no longer need to operate virtually.
Sell Digital and Self-Produced Goods
Keeping inventory can be costly. Not only do you need to rent physical space to store goods, but there are related costs like insurance, security, and temperature control. If your business sells digital products, inventory expenses are a non-existent part of your balance sheet. The same is true for organizations that sell services and unique hand-made items like custom jewelry. Those merchants need not worry about the high price of maintaining inventory. Service providers deal with intangible assets, and sellers of hand-made products rarely need more than an in-home closet or basement for storage purposes.