We've heard of many startups being launched with a shoestring budget, but not many have the same luck. In reality, you will need more than a few dollars to get things running. That's the reason why most founders take out loans to finance the initial costs of their startups.
However, borrowing money won't still be enough to kickstart your business concept. You still need to set aside extra funds to amplify the growth of your business. Here are a few tips to help you save money in realizing your startup goals:
1. Spend less on luxuries
If you think your startup idea has the potential to catch on, you will sacrifice the things that aren't part of your daily needs. Luxuries won't sustain your business, so it's best to cut down on subscribing to multiple streaming services and eating out.
2. Get a side hustle
If you have enough free time each day for a side job, you might as well monetize it. There are lots of opportunities to earn extra you could add to your starting capital. Whether it’s designing websites or dropshipping, a side hustle would give you more resources to get things started. If you’re looking to work as a freelance creative, here’s a good list of profitable side hustles to get you started:
There’s always a high demand for digital marketing specialists as more businesses are planning to spend more time and money on brand awareness, lead generation, and content marketing. While competition remains tight among freelance marketers, you could still find success in certain niches such as virtual assistance and graphic design.
The best part is that you can develop a lucrative career in freelance digital marketing even without any prior experience. Everything you ever need to know about digital marketing can be learned through online courses.
An added benefit to this is that you get to learn how to strategize and implement a digital marketing campaign for your own business. As you save money to finance your startup, take this as an opportunity to help your startup take off.
If you’re good at one thing, you should monetize it by teaching others how to do it right. Being a subject matter expert online will get you far, especially if you know a skill that’s in demand. Platforms like Skillshare and Coursera are there to help you set up pre-recorded videos and downloadable materials that users can access on a subscription basis.
Having your series of courses is a great way to earn passive income you can use to fund your startup. All you need is to make sure you’re producing high-quality videos and well-structured lessons.
By being a course creator, you have a powerful means to earn enough money to launch your startup. You can even continue offering new courses as freebies to your first customers. This will help establish you as a thought leader and generate sales leads.
Coaching and consultancy
Before you get to start your own business, consider offering consultancy services to businesses that need advice on how to run and grow their businesses. Consider developing a business coaching program where you get to help small-time entrepreneurs set everything up.
Not only will this help you earn income on the side, but you also get to build your network and use this platform to promote your startup and attract investors who see potential in your business. All you need to do is to focus on certain aspects like business leadership and professional development.
After that, you can set up a professional website where visitors can schedule consultations with you. Don’t limit yourself to this list. Look for other side hustles that align with your skills and interests so you can save for your startup and, at the same time, learn important skills.
3. Reduce your home expenses
Another way to save money is to consider downsizing to a smaller, more manageable home. When you're faced with increasing utility bills and property taxes, you may have to transfer to another neighborhood where the cost of living is more affordable. Consider renting instead to cut down on the extra expenses you would otherwise pay towards owning a home.
Consider it a major lifestyle change that precedes the launching of your startup. If you decide to sell your property fast so you can avoid extra costs, consider selling it to companies like Four 19 Properties that buy homes at fair cash offers so you can move out within weeks. If moving out isn’t possible at this time, you might want to consider other means of lowering your daily expenses:
Reduce your energy consumption
Switching to LED lights is the simplest way to reduce energy bills. But a more popular option is to invest in solar panels. The initial costs might be high, but the savings you will earn through local energy buy-back plans will be enough to sustain your startup in the first few months of operation.
Consider buying secondhand
Instead of purchasing new furniture, opt to buy these from secondhand stores. They might not have that premium look and feel, but secondhand furniture looks just as good. If you’re thinking of a major living room renovation, save hundreds of dollars for your startup by ordering from the right vendors.
Opt for debt consolidation
If you have too many debts to shoulder and you can’t seem to afford another loan to start your business, then you might as well go for debt consolidation. This would mean rolling multiple debts into a single package so you will only make a single payment each month.
But the best benefit it gives is a reduction in your interest payments. That also means you get to write off your debts faster so you will have more money to put into your startup funds each month.
Refinance your home
Have you stayed in your home for more than ten years? If yes, chances are your property has built enough value to qualify for refinancing. You apply for a new mortgage with more favorable terms and lower interest rates.
Through a refinance, the new mortgage is used to pay off the current one, leaving you with loan terms you can afford. The extra cash you save each month can go towards major preparations for launching your startup.
Pay off your debts early
Having immediate access to credit gives you massive purchasing power but for a massive price. Shopping with a card is fun until you see your bills and calculate the total amount of interest you owe. Rather than letting the numbers build up, focus instead of writing off your debts earlier. A better option is to avoid using your credit card for luxury expenses and freezing automated purchases.
Make DIY repairs
If you are dealing with a minor structural or aesthetic problem in your home, getting a contractor to fix it would be too costly. You would be better off solving the issue by yourself. There are DIY guides online you can follow that will teach you how to fix small problems and save money to finance your startup.
These small changes to your spending habits can add up in savings to help your startup prosper. Before long, you will be able to enjoy greater returns once your idea finally takes flight.
4. Be conservative with borrowing
There's no harm in borrowing extra cash to fuel your startup. The danger comes when you borrow more than you can afford. There may be loan terms with minimal repayments over a long period, but the interest you will rake in will be a great burden.
A good rule is to start small and use the loan only for its intended purpose. Don't give in to loan products you think are practical but are siphoning your hard-earned money.
It’s always safe to apply for government-sanctioned loans at low-interest rates. The Small Business Administration offers a variety of microloans you can afford. That way, you will be able to raise funds for your startup without tapping into your daily budget. These loan options are also great if your credit record is less than stellar.
5. Get partners to help out
Saving money is a good start, but when you take into account the overhead costs once your startup launches, you will need to look for fund sources to cover operating expenses. A better strategy is to pool capital from people you trust who are willing to invest in your startup.
You can take this a step further by starting a crowdfunding campaign. Unlike reaching out to angel investors or VCs, crowdfunding enables you to collect donations from people who want to see your startup idea thrive. It’s only a matter of designing a good pitch and choosing platforms like Patreon to serve as your channel for promoting your pitch and receiving contributions.
Having partners has its challenges, but its biggest advantage is the fact that you get to distribute the financial burden. This gives you more space to save money for future expenses, such as possible expansions, new product lines, and marketing campaigns.
Saving money for a startup is an investment that repays you handsomely. All it takes is to undergo initial sacrifices in exchange for long-term gains and market domination.