Minimizing Costs in the Initial Investment of your Company

Minimizing Costs in the Initial Investment of your Company

Every entrepreneur would like to have the magic formula to be able to minimize investment costs when starting your business.

And although in real life there is no such formula, if you can follow some practical advice to start with a lower burden of expenses and thus ensure a better take-off of your business project and greater competitiveness.

So if you have been worried thinking about how to protect your capital and minimize investment risks, follow these tips:

  • Recruitment. It is very important to determine which people are really needed for leadership and business operation Since payroll can make a significant difference to your budget. Hire the fewest people to start and gradually grow. Get advice from an expert to launch a suitable salary policy that is decent but at the same time helps you keep the business afloat during the first months that are the most difficult. Consider outsourcing as a possibility to fill certain temporary positions or to further reduce your costs. Ideal for IT support, training, cleaning services, etc.
  • Shop. Not all businesses require a commercial premises at the beginning, so an alternative is to consider the possibility of starting in an area equipped for this purpose in your home or in the garage of one of your partners (as many large successful companies have done). .
  • Virtual Offices. Consider as a viable alternative, the possibility of using a virtual office that today are very common, practical and free you from the need to invest in furniture and office supplies since these offices are usually very well equipped with office equipment such as telephones, fax, Internet, computers, conference rooms, desks, waiting rooms, etc. And in addition, many include secretarial services and the rental costs of the premises are diluted between the different contractors of the service.
  • Avoid Expensive Credits. According Robert Kiyosaki, there is good debt and bad debt. If you really want to start your business in a healthy way, you must base it on good debt, that is, credits negotiated with favorable interest rates, based on an executive plan and an investment budget and not make excessive loans and without taking care that said credits do not they “eat” the profit from your business.
  • Negotiate, Negotiate and Negotiate. We have always stressed that knowing how to sell is as important as knowing how to buy and how to collect. And for all these activities the skill of negotiation is required. So if you want to maintain a policy of cost leadership, you must learn and teach all your employees to always maintain a negotiation mentality in everything they do. Talk to your suppliers, your customers and even your employees and always negotiate the best benefits for your company. The key to this is the win-win principle, which we will talk about in another post.
  • Secure Your Patrimionio. Insurance – we could say – is a necessary evil. Many times they are seen as a cost but in the long run they turn out to be an investment. Insuring vehicles, expensive machinery, delicate products and even your computer equipment is important as many small and medium businesses they are weakened when, due to contingencies, they are violated by dispensing with their equipment or products. So, don’t wait for a negative incident to happen before you consider insurance. And of course you do not need to ensure everything in the first month, you can make a gradual and coordinated strategy to achieve it. (and don’t forget the previous point …)
  • Use Free Software. The investment in computer equipment and software is usually very expensive so you can consider the possibility of using free or free software to implement the functions of your company. There are excellent versions of productivity software for SMEs that can be found on the Internet that have no cost or whose licenses have only a significant and very affordable value compared to commercial software licenses. Of course the disadvantage of this software is that you have to learn a little more, train your staff and adapt to the use of it, but I am sure that in the long run you will be able to value the savings it represents.
  • Works on a Budget basis. The best way to minimize the initial investment costs in the company is to prepare a budget as this will allow you to prioritize and give each area of ​​the company its due importance. So production is just as important as sales and marketing strategy. If there is no product, there will be nothing to sell. And if there are no sellers, the product will go nowhere. Therefore, it is not a question of excessively “cutting” expenses but of a properly thought out and prepared strategy to maintain the balance due in the business.
  • Training. Investing in training is important as it contributes to better overall use of resources. However, you are also not required to send your 4 operators to a technical machine learning course or to send your 8 salespeople to a sales course. You must send one or two of them and then feed back the information to the others, thus maintaining a team spirit with constant learning. And at the same time you save yourself some good pesos.
  • Improve your Production Techniques. Another fundamental strategy for cost reduction is the regular evaluation of production techniques in order to improve processes. Remember that outdated techniques can be very expensive in the long run. Therefore, you must always seek the necessary advice and be willing to change and always implement improvements that translate into better costs and therefore higher profits.

Finally, remember that a large or small company It requires your leadership to make decisions in the face of change, and that is a process that begins with planning and continues throughout the life of your business.

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