Starting a business can be an exciting endeavour and excitement often does not lead to smart spending choices. There are certain business expenses you should hold off on until your business starts generating revenue. Here are some items you should table until you’re in the green.
Incorporation expenses
It can be tempting to get caught up in the technicalities of starting a business, getting caught up in incorporating and such instead of making the best product and finding a way to boost sales. Hold off on incorporating and all related fees until you’re making money. Start the business small, even as a sole proprietorship then once you’re in the green you can incorporate.
Office space and furniture
Rental expenses are one of the things that can be most crippling to a business. Very many businesses can be run from home or a shared workspace and you should exercise that option. Hold off on signing a lease until you’re generating enough money to justify the expense. This also includes purchasing other office supplies like furniture.
Inventory
In the beginning, you have to fight the impulse to acquire significant inventory, especially considering the planning fallacy which is how we often fail at predicting the future. Play it safe by keeping inventory costs as low as possible until you begin to make money.
Employee expenses
Hiring employees can be a significant expense. In the beginning, when the business is small and you can handle the workload, consider holding off on hiring employees. You don’t want to hire people only to exploit their labour. Only hire people when you can afford to compensate them fairly for their contribution. Business: Outsourcing Freelancers Vs Hiring Permanent Employees
Equipment
Unless that equipment is critical to the business, you should hold of on making any big purchases. Consider hiring or paying to use someone’s equipment instead especially if the equipment you need for your business is capital-intensive.
Marketing and advertising
Marketing and advertising can give your business reach and boost your income. However, it’s a gamble and you should only ever use money you could afford to lose. There are no guarantees so you should hold off on that expense until you’re making money.
Professional consultants
It can be tempting to hire the services of professional consultants to give your business a boost in the marketplace but you should avoid that. Professional consultants while they can offer great guidance are incredibly pricey and there are no guarantees.
Business travel expenses
Business travel and entertainment expenses can add up really quickly so make use of online platforms to communicate with people in far-flung areas. Put a pause on all non-essential expenses including business celebrations until you’re making enough money to back it up.
The rule of thumb is to conserve cash and minimize your non-essential expenses as much as possible. Develop a plan and budget and stick to it. If you buckle down now, then maybe if you’re lucky in the future you’re business will be in a strong enough position to allow you to afford a little more.
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