4 Startup Costs You Can Easily Lower

Starting up a small business can be both exciting and intimidating. On the one hand, you get to work what you want to and be your own boss. On the other hand - you are faced with having to make serious decisions and think hard about how to improve operations or reduce costs.

Luckily, there are many ways in which you can lower your startup costs, some of which are very easy and straightforward. Check out our list of 4 startup costs you can lower easily.

1. Lower Costs With a Business Budget

A lot of unaccounted and unpredicted costs can be uncovered and eliminated when you create your own business budget. Doing so will make you think hard about what your business needs are. It will also provide you with an overview of the money coming in and going out on a monthly basis. You are also advised to set up a weekly or monthly time when you sit down to review and manage your budget so that you stay on top of it.

And if you are starting your business now, create a business budget to plan all the upfront costs and expenses you will have and include any loans or grants you expect to receive. As you manage your budget you may also find that you have to be more flexible with your initial plans and leave certain purchases that are not vital for later. That way, you can stay on top of your finances and reduce unnecessary costs and expenses that can creep in if you don't pay attention.

2. Reduce Your Surety Bond Cost

If you are required to obtain a surety bond in order to operate your business, you may want to look into the various ways of reducing your bond premium. Your surety bond cost is determined by your credit score, your financials, your liquidity and assets but also your work experience and even your choice of surety bond agency.

To reduce your bond costs work on improving your credit score and create proper and detailed financial statements to share with your surety. Also, showcasing your assets and providing the surety with a detailed account of your work history (and references) can further drive your bond rate down. Finally, choose a surety bond agency that can offer you good rates by professional and reliable surety bond companies. By doing some or all of this, you can expect to get a lower rate on your bond.

3. Eliminate Software and Hardware Costs

Software and hardware costs can make up a large chunk of your startup costs.  Of course, you can't give up either of these but you can reduce them by going for cheaper or entirely free alternatives.

For example, instead of buying new equipment, look for refurbished or used equipment that will serve you for the first few months or even for a couple of years. This can save you hundreds of dollars initially.

Free software alternatives are also a way you can reduce many expenses. From cloud services such a Google Apps and Google Drive and Microsoft Office alternatives such as Google Docs and OpenOffice to project management tools such as Trello, there are many programs you can use entirely free of charge.

4. Reduce Taxes Through Deductions

Tax deductions are another way to reduce some of your small business costs. Anything that is necessary for your business to function can be counted as a deductible expense. This includes:

●   Travel or car expenses
●   Current or capitalized expenses
●   Health care costs
●   Home office expenses
●   Retirement contributions
●   Phone calls
●   Others such as: rent on machinery, legal fees, advertising and more

All of the above can be a tax deduction if it is relevant to your business. Make sure to consult an accountant before you consider something a deductible, keep good records of your expenses for at least a few years, and use a tax calendar to remind you of important tax-related deadlines. In this way, you can save a good amount of money that you can then use for growing your business further.

Other Ways to Lower Costs?

What other ways of lowering small business costs are there? How do you reduce costs? Let us know in the comments!

About the author

Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.

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