Written by: Daniel Groves.
Daniel is a UK-based business consultant who specializes in helping startups grow and scale.
In 2022, 47% of failed startups cited lack of financing as the main factor. Though this figure is higher than in some previous years, it isn’t a new phenomenon. New brands that struggle to remain afloat are often battling against not only small but a lack of knowledge on how to spend their limited money. To avoid making the same mistakes, it’s vital you learn where to funnel your funds as you begin to grow your business.
Budget for the Essentials
No matter how small your budget is, some expenses are unavoidable. To build a successful brand, you have to invest at least a few pennies! Before anything else, be sure to set aside the money for these essentials to keep your business afloat.
Of course, must-haves differ from startup to startup. If you’re running a shop, paying rent or mortgage payments is a must. If you don’t have a shop, website hosting and a domain name are usually necessary and should be high on your priority list.
Some other frequent essentials include:
- Essential inventory/equipment
- License fees
- Advertising and marketing costs
- Employee wages
For regular outgoings, it’s smart to set up direct debits at the beginning of the month. The money you need to cover these expenses will be gone before you can spend it on anything else, leaving you with a better idea of how much you have left to put into business growth.
Focus on Educating Yourself
If your budget is tight or you want to cut down on expenses, one of the best investments you can make is in yourself. It may sound weird, we know, but stick with us!
Educating yourself in key business skills can reduce the costs of hiring third parties and keep overheads low. If you’re already pretty tech-savvy, it might be worth investing some time and money into learning how to create a website, so you can save a whole lot on development fees in the long term.
Consider your current skills and areas of business strategy that you think is best suited to them. If you’re a good writer, a quick copywriting course may enable you to write your website content yourself and save on hiring a copywriter. If you have a knack for social media, a few lessons may be all you need to manage your own profiles.
Invest in the Right Tech
For most startups, technology is a must. The modern brand relies on tech for smooth, secure business transactions and excellent customer experiences. This makes it an area that you don’t want to skip.
However, tech can be pricey. Before you buy anything, consider which products/software are the most vital to your brand, and will most improve customer service and boost profits. Many consumers expect contactless payments nowadays, for example, making solutions like a SumUp card reader or a PayPal business account essential for preventing missed sales. A fast, reliable laptop is another must for many, as it allows you to build and monitor your website and grow the digital side of your company.
Create an MVP
A minimum viable product (MVP) is the most basic version of what you’re trying to sell. For startups, creating an MVP is a fantastic way to test out your business strategy and start earning money without investing huge amounts.
Say, for example, you want to start a food delivery business. Your MVP may be a simple app that lets users contact a variety of different restaurants with a basic tracking system. It’s a no-frills solution that does what it says on the tin. As your funds grow, you can add to your app, improving your services and enhancing your USP.
Creating an MVP doesn’t just help you save money, but also means you don’t have to wait until the perfect time to launch your business. You’re not fully funded yet? Doesn’t matter! You can start earning an income through your MVP, adding to your budget as you build your brand.
Always Invest in Customer Service
Even with a limited budget, it’s crucial to keep your customer service up to scratch.
This is one of the best ways to cultivate loyalty from consumers; almost 90% say they’d be likely to make another purchase after a positive experience.
Investing in customer service comes in many forms. If you don’t have the time to reply to social media messages and emails within a day of receiving them, hire someone who can. For larger startups, chatbots are a useful way of directing clients to the correct departments, and FAQs can help cut down on the number of customer service staff you need.
Build Up Partnerships
One of the huge perks of the digital age is how easy it is to create partnerships. Social media has made connecting with other businesses a breeze, allowing you to team up for mutual gain. Start by looking for brands in your local area that offer a product or service that you need, and consider a trade that would be beneficial to both parties.
For example, you may find a photography company that’s run by a new parent. Your company sells baby clothes, so you offer to send them free clothing in return for a product photo shoot. It’s a win-win that’ll keep your bank balance happy!
Creating a startup isn’t easy work, and there’s no doubt that a lack of funds can be a huge hurdle. Hoepfully, this article has shed some light on how you can stretch your budget further. With some clever planning and wise allocation of resources, a lack of financing doesn’t have to stand in the way of success.