Lean Start Ups

One of the biggest challenges in starting a small business is figuring out where you should be spending money and where you could be saving.

There are a few basic ways that you can save, but you have to figure out if you can afford to;

1. Sweat Equity. This is doing the real leg work and hard work all by yourself.  This often could have a huge learning curve, but you don't have to spend the money to have someone else do it. If a task is something that you know will benefit your business in developing that skill set, is repetitive so would have to be outsourced often, and has little risk involved for a beginner, this could be a good option.

For example, if you are a start up with 10-12 transactions a month and you are comfortable with numbers, you may keep bookkeeping inside your business.  Whereas tax preparation happens less frequently and has a higher risk factor if there are mistakes, so those are still better handled outside.

2. Bartering. This needs to have a business needing your product or service at the same time as you need theirs. Finding the perfect business to barter with at the perfect time is the problem. But if you can find them, this is a good solution.

3. Variable Costs. If there are instances where your company can reduce high fixed costs, your business becomes less exposed to risk.

For example, buying IT in a SaaS model or leveraging the Cloud may be a more viable solution for a small business than buying software and the network required to support their technology. This is good as the upfront costs aren't there, but if you hire 5 people you simply have to buy 5 more SaaS user IDs to have them get started.

4. Lean Development. This is when the company builds infrastructure that is aligned to the business development plan.

For example, a local tour company is really interested in buying buses for day trips, they would only create the new day tours and buy the bus once their basic local walking tours had begun to make some sales.

There are many creative ways for small business to reduce their costs.