How to Save Money in Your Startup Budget

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The early days of startup development are the leanest. Outside funding is hard to come by for first-time entrepreneurs with an unproven idea and few entrepreneurs have the personal savings to support business ventures through trial and error.

Yet year after year, scrappy entrepreneurs make it happen. How? These are the startup budgeting tips that help cash-strapped entrepreneurs launch for less.

What’s in a startup budget?
A startup budget details what it costs to launch a business and get through the first few months.

• That includes one-time purchases of business assets, ongoing expenses like rent and payroll, and costs associated with organizing a business.
• Startups also have to consider the costs of bringing a product to market, including developing a minimum viable product, purchasing inventory, and marketing.
• Forecast startup revenue by building two sets of projections: a conservative forecast and an optimistic one. Conservative assumptions guide the budget while optimistic goals motivate and inspire.
• Don’t forget to factor in an emergency fund. A little bit of financial padding protects against overspending and preserves business credit in the event of cash flow shortfalls.

How to save money on startup costs
Does expected revenue fall short of spending needs? To solve budget shortfalls, start by saving money on major startup expenses like these.

• LLCs have low filing fees and simple organization documents that don’t require a lawyer, making an LLC an affordable alternative to full incorporation. Along with lower filing and maintenance costs, LLCs aren’t subject to corporate profit taxes.
• Instead of splurging on new business equipment, buy secondhand and shop surplus sales. Leasing is a good option for short-term equipment needs, but read rental contracts carefully.
• Starting with an MVP is a smart strategy, but MVP development has costs of its own. Agile product development and outsourcing reduce costs while maintaining project flexibility.
• Find low-cost ways to market your business, such as using social media and email marketing. Do everything you can to expand your audience through networking—you can even connect with old classmates to find extra support for your business. 

How to reduce startup operating expenses
When startup savings aren’t enough to balance the budget, look for ways to save on the ongoing costs of running a business.

• Office space is a major expense that’s increasingly unnecessary for startups. Specialized tech stacks enable remote-first businesses and make high commercial rents a thing of the past.
• Don’t be afraid to negotiate when choosing suppliers. Even if a vendor won’t budge on pricing, negotiating contract and payment terms can have a positive impact on cash flow.
• Avoid the fatal mistake of hiring too much, too soon. Hire permanent staff only as needed and use independent contractors for specialized skills and one-off projects.

Cash flow problems and funding gaps plague startups, but you don’t need a stockpile of savings or a team of investors to make it through the early days of startup development. Use your startup budget to identify potential shortfalls and find ways to cut back without limiting startup growth. With smart financial management, you can persevere through early cash flow challenges and launch your business on a strong financial footing.

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Guest post by: http://economymom.com