Are you thinking about starting your own business? You’re not alone.
The number of UK startups continues to rise year on year, and this trend looks set to continue despite a volatile political environment. Fears of an unstable post-Brexit era have done little to dampen entrepreneurs’ desire to “be their own boss” — the number one reason more than half of small business owners start a business.
At the start of 2018, there were 5.7 million businesses in the UK and 99% of all private sector UK businesses are SMEs. However, securing funds for a startup is far from easy and 46% of SMEs report having experienced barriers to accessing finance. So, if you have your heart set on building your empire, there are some simple ways you can cut the cost of starting your own business. We’ve put together a Frugal Startup Guide to help you hit the ground running, without busting the budget.
Keep the Number of Employees to a Minimum
According to research by the Department for Business, Energy & Industrial Strategy, the number of businesses operating without any employees increased by 82% between 2000 and 2018. Advances in technology are changing the way we work. There is often no need to pay for a full-time employee when technology can complete the same tasks at a fraction of the cost.
The average salary for a receptionist in the UK is £18,000 a year. Compare this to the cost of a virtual receptionist — which can be as little as £9.95 per month — and it’s not hard to see why so many startups are cutting back on staff costs. Additionally, if you have no permanent staff, you don’t need to shell out for office space — a crippling expense in some parts of the country. A virtual office in London would save you thousands of pounds each month in rent, electricity, heating and other costs associated with maintaining a physical office space.
Scale Your Business Gradually
If you’re starting a business, you’re a person with plenty of drive, ambition and vision. It can be easy to get carried away in the excitement of seeing your long-held dreams becoming a reality. Rome wasn’t built in a day and it’s okay to start small and build gradually. Don’t be tempted to blow your budget trying to achieve your ultimate vision in the first quarter. You’ll be bombarded by salespeople trying to entice you to create a flashy website, recruit top talent and splurge on expensive office equipment. Only buy what you need to get up and running.
Create a roadmap and plan milestones for your first year or two of business. If an activity doesn’t help you towards your next business goal, it’s an investment for another day. Running a business is a steep learning curve and it’s impossible to know exactly what are the business essentials in the first few months. You will learn what is necessary and what’s a luxury as your business develops. So give yourself time to grow the business gradually. As Richard Branson, founder of the Virgin Group, says, “A big business starts small”.
Be Creative with Your Marketing
Very few new businesses have a huge marketing budget that allows them to run the sort of campaigns big brands deploy. But getting your company name out there and building a brand is essential if you want your business to last longer than the average of 5 years. If your budget doesn’t stretch to a billboard in Piccadilly Circus or cool Snapchat filters, you’re going to have to get creative with your marketing.
There are plenty of free and low-cost campaigns you can run across social media platforms such as Facebook and Twitter. These can often be far more effective at getting people talking about your brand than big budget advertising. Word-of-mouth is still one of the most powerful forms of marketing and social media is your way to get people buzzing about what you do. Also, don’t neglect good old-fashioned networking. It may require a significant amount of time, effort and shoe leather, but attending local events and volunteering as a guest speaker are great ways to humanise your brand by putting a face to the company.
Start as a Sole Proprietorship
If you’re new to the business world, the terminology around how you register your business can be confusing. A sole proprietorship is free to set up and it’s the only option if you want a cost-free operating structure. Running your company this way means you own the business and are responsible for its debts. If you start small, this shouldn’t be too much of a risk and it can save you a lot of money in the initial stages of starting your business.
However, as your company grows, you’d be wise to incorporate your business. Incorporation means your company is a separate entity to you and that you are not liable for any debts it accrues.
Don’t Let Budget Limitations Prevent You from Following Your Dreams
Starting up a business can be an intimidating and costly affair. But there are ways to reign in the budget and get your company up and running without taking on crippling debt. Start small and build gradually. There will always be more you could spend your budget on. But starting frugally will help you last the distance.