Entrepreneurship is not for the faint of heart: Supposedly only one in 10 new businesses survives more than five years. One of the key differences between those that succeed and those that don’t is whether they embrace the lean starup ideal — meaning they keep spending to a minimum. With that in mind, here are five tips on how to rein in your overhead expenses.
Right Size Your Promotions
Although online advertising is presented as a cheaper alternative to offline promotions, things can work out very differently in practice.
People who are new to online advertising have a tendency to overspend: whether they’re using Google AdWords or even buying ads on Facebook, it’s all too easy to target too broadly.
Narrowing down the audience targeting can make for a much more cost effective promotion, and while experts can make it look easy, it actually takes time to learn how to master online ads. Get the ball rolling by lowering the budget you allocate for the ads in the online dashboard.
Learn to Do SEO or PR Yourself
While you learn how to become a better advertiser online, you can also look into whether other alternatives that might be cheaper — it might mean learning how to do them yourself.
Some believe that search engine optimization can be less expensive than advertising, but it also has a learning curve. The same goes for public relations and even social media marketing — when you’re newer at them, you need to practice over time to get to the kind of skill level that achieves results.
Take classes to learn how to do your own PR or SEO, or read up on how to do them. Otherwise, if you have to hire someone to handle any of these other types of promotions, it can become more expensive than you have the budget for in your first five years in operation.
Find Event Sponsors
A variation on public relations is event marketing, While some practitioners make it look like an art form, there are aspects of event hosting that are almost common sense.
One way to get the best of both worlds is to find a sponsor that would co-brand the event with you and either pick up the tab or provide expertise that you might still be acquiring.
Look for sponsors that make good trading partners — they stand to benefit from the event in different ways than you do, yet they have expertise you need but don’t yet have (and vice versa).
Don’t let anything take you by surprise: Contemplate all possible worst-case scenarios and prepare for them in advance.
Make contingency plans and make syure you have adquate protection for your business, including insurance — while having to pay insurance premiums might at first seem like the opposite of reducing overhead, it’s actually a money saver in the long run.
At first it might seem like something easier said than done, but if you put your mind to it, there’s always ways to cut costs.
Look for ways to negotiate better rates with your suppliers by leveraging process efficiencies, emerging technologies and possibly economies of scale.
And are you buying anything for your business that you could do without? If you have even the slightest doubt about whether you absolutely need something, that means you might be able to stop buying it.
Just about anything you might hire someone to do can also be outsourced or done in the cloud for less money.
At the very least, you can find contractors or temporary employees to do the work. Perhaps you can bring in an intern instead of hiring a full-time staffer. You can cut personnel costs fairly easily if you put your mind to it.
Readers, what have you done to reduce overhead expenses for your own business?