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6 Tips to Rein in Spending and Be a Lean Start-Up

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6 Tips to Rein in Spending and Be a Lean Start-Up

By Caron_Beesley, Contributor
Published: November 5, 2012 Updated: September 29, 2016

The average cost of starting a business is $30,000, according to a 2009 study by the Kauffman Foundation. But whether your cash comes from savings or financing, watching how you spend your money is critical to the success of your venture. This means establishing boundaries and habits that ensure you spend your money wisely and operate as a lean start-up.

Here are six ways to rein in spending as you start and grow your business:

Work from Home, Co-Working Spaces or Serviced Office Space

This one may sound obvious, but not all new businesses need to jump into a commercial office lease right away. Setting up a home office is a low-cost alternative (and can save you tax dollars).  If you find you need a more social setting, consider a co-working space. These facilities are available in many cities and offer great opportunities for you to mingle with like-minded entrepreneurs. These workspaces are often also a lot cooler than any space a new start-up could ever afford. Talk to your local Small Business Development Center about co-working spaces in your area or hit up Google.

If you really do need your own office space, consider renting a serviced office or executive suite. Usually located in busy business districts, these premises are fully equipped and managed by a facility management firm. The rental agreements are often more flexible than commercial leases and give you the option of easily scaling up if you need to. Typically, a serviced office broker can help you locate the right space.

Buy Surplus and Barter

Save money by buying used equipment and office supplies. Check Craig’s List or eBay or buy government surplus equipment (a little-known but very cost-effective way to equip your business).

Bartering – exchanging goods and services directly with another party – is also an underutilized business practice among start-ups. Think about ways you could barter to reduce costs. For example, if you run a painting business and you need to purchase a business vehicle, could you barter a discounted price from the dealer in exchange for a new coat of paint in his showroom?  Read more about bartering from SBA guest blogger Barbara Weltman.

Don’t Hire Employees Until You Can Keep Them Busy

Offer interns work experience or hire independent contractors or even friends and family on an hourly or project basis to keep your costs low. If you need them to work alongside you in an office space, introduce a hot-desking policy so that your workers can share a space on a rotating basis without you needing to lease more space. For more tips, read “Chief Everything Officer” No More! – 6 Options for Staffing your Growing Business.

Be a Budget-Conscious Marketer

Invest in marketing and promotion thoughtfully and have a game plan. Think about low-cost tactics (you’ll find some here) and don’t overdo it on the glossy marketing materials – are they really necessary? If you and your staff have a clear elevator pitch and can engage and follow up enthusiastically with targeted prospects, there’s a good chance you’ll get a similar return on investment as the big guys with their glossy slicks and advertising budgets.

To help you stay on track, create a plan for the year or quarter and calendar it out. This way you’re more likely to follow through, stay on-budget and be less burdened by the need to come up with last minute marketing tactics. Don’t forget to monitor ROI to help you make informed decisions about what works and what doesn’t. This can be as simple as asking and tracking how customers heard about you.

Check these blogs for more tips:

Safeguard Your Personal Assets

If you think you are likely to incur debt during your start-up phase, consider forming a limited liability company (LLC) to protect your personal assets – your finances, car and house. Forming an LLC will ensure you are not personally liable for debts or judgments brought against your business as a result of a lawsuit.

Don’t Be Afraid to Negotiate

Whether it’s a contract with a supplier or a new customer, you should master the art of negotiation. Many new business owners skip this important best practice in their early years, but practicing negotiation early will help you establish relationships that save you money now and over the long haul. Just be sure not to nickel-and-dime the fair offers that come your way, and work to build relationships with these vendors through repeat business and referrals. Get more tips in 6 Tips for More Seamless and Fruitful Business Negotiations.


About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


I would definitely agree that low-cost marketing tactics can be great for a start-up, but keep in mind that utilizing multiple mediums is key. In today's age of technology creating an integrated marketing plan will be a key to your success.
Thank you for these wonderful tips! Money seems to have an uncanny way of slipping right through the fingers of even the most budget-savvy entrepreneur. A few more tips and tricks on managing a budget is always appreciated! Here is another interesting article to read. This post was edited to remove a link. Please review our Community Best Practices ( for more information about how best to participate in our online discussions. Thank you.  
Work from Home is good to start your small-business. I am a travel-copywriter.
One of the points you made in this article was negotiate. I love this point because this is what all the big companies do. For example, advertising companies are willing to give them a good deal because they want the business. In this economy you can negotiate to help keep your cost down.
The article contained some great, common sense points, and the previous comments also contained some good food for thought. I always found that if you have a line of credit, or a cash reserve set aside for a certain project, it is almost sure to be used and you'll still need more. Try and develop a mind set that this first project/offering/event has to work and pay for itself quickly, or you're finished, and you'll find you really can do more with less. I liked the comments to follow the money, and don't "buy" bad business. (Sell to those who don't pay.) Good luck.
Startups are not easy you have to be determined to succeed no matter how many barriers are placed in front of you. Keep motivated and believe in what you are doing. Set Realistic goals and Targets.
When I was first starting in business someone once told me that if you have too many things to do and don't know where to start, always start closest to money. Money is to a business like oxygen is to your lungs. Keep it close and don't spend it unless you know it will aid in producing revenue. Always think about how each expenditure will help produce revenue.
All of the comments are obviously valid points. Spend less and collect more. If you don't know how to negotiate and/or save money than you better have a valuable talent like singing or dancing. The majority of the money you spend should be on acquiring more customers which in fact makes you more money to spend wisely, and do just that spend it wisely by planning to hit your target market and executing the plan.
Great post - just love your blogs, well thought out and articulated. Instead of getting into the details, as you did that quite well, the overall focus should be on spending your hard earned or hard acquired money on things that will bring in value or revenues to your business. For every dollar you spend, those items bought, should bring into your company (either via new revenue or cost savings) that same dollar or more (preferably more). Far too many business owners – new ones or established one – tend to spend on things that bring nothing to the business – I just think that it is in our nature. All that does is take needed money out of the business. The goal of business is to leverage assets – like cash – to generate more value. Spending on items that don’t add value is just wasteful and goes against the whole reason you are in business.
Good article, Caron. If I may add one thing that is counterintuitive but makes sense as you gain more experience. You make money on the clients you do not take. Choosing your clients wisely is a big part of operating a successful business.


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