When it comes to starting off a business, it’s crucial to get off to the best possible start. The idea of creating something that’s your own and running your own company is brilliant, however, with start-ups it’s easy to go big, flash and importantly expensive. Every new business has essential costs, which are needed to cover everyday expenses and overheads. However, it’s easy to get carried away within the early stages of a business and just start spending. But having too many overheads before the business has reached a point of solidarity is a quick-fire way of racking up too many debts.
Overloading the workforce
Being your own boss, and after pouring copious amounts of energy into a business, you’ll be easily tempted to thing about hiring a brand-new workforce to do all the work for you. Likewise, if you see an influx of work, due to seasonal timings or a change in the market, it can be tempting to go all out and hire a larger workforce. The problem comes when the work slows down, and you have staff not doing a lot and on a wage.
A short-term solution is to subcontract areas of work, or for specific roles as a means of getting through busy periods. But the hiring of full-time staff can be a huge drain on the cash reserves.
A flashy office
A brand-new hip office will certainly be a boost for morale, and will no doubt be great when it comes to hiring new staff, or meeting prospective clients. But the big question you have to ask yourself, is, is it really worth it? How much return on investment will you see in those early years?
If you’re growing at an exponential rate, it can be easy to justify the cost of a big office with the grown of the company, whilst there’s no harm in planning ahead and upscaling, does the business really need to spend this money so early on? Could you and the workforce work just as well in a smaller, less flashy office? If so, it can be a huge save on cash reserves.
The coronavirus pandemic has massively changed the way we work. On one front, many businesses have seen that staff can be just as productive when working at home, whilst on the other, it has shown the importance of team work and team bonding. With this in mind, having a small office which allows staff to come and go, could save you mountains in the long run.
Going overboard with the marketing
With everyone now having their own form of marketing, it would be easy to jump on the bandwagon and go straight into marketing overload. As important as marketing is, too much too soon can put people off, spread the wrong kind of message and be incredibly expensive. Although having your own brand and branded merchandise is important, as it shows the professionalism of a business, too much too early could just be over indulgence, not to mention a big weight on the purse strings.
Creating the right kind of promotional material is essential. Every business should have a clear message and a clear strategy when it comes to marketing, if a business gets that wrong at the start, it could have big repercussions later on. It’s important to promote to the right people, through the right channels and the optimum time, it’s not just a case of throwing money at everything.
Going overboard on expenses
Every business is allowed to claim back expenses, but they key is not taking advantage of that. It could be easy to spend and spend on drinks, or meals for clients meetings, but it’s important to have the right mindset not amassing huge amounts of money which could result in business debt. Being careful and mindful in those early years in crucial when it comes to getting your expenses into order.
Summary
Starting a new business, is exciting and scary all rolled into one. As promising as the business could be, it can be easy to get ahead of yourself and go all out spending too much of the businesses start-up cash. Make sure you do your research on all aspects of the business, marketing, staff, premises and what kind of money is acceptable to spend on expenses. It’s also vital to remember, that depending on the type of business you have, personal and business debts can intertwine, so whilst you can pump money into the business, debts can also affect your personal finances
Interesting Related Article: “Business Formation Guide: Choose a Business Structure“
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