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How to Manage the Start-up Cost of a Business

How to Manage the Start-up Cost of a Business

Starting a business is never easy. Regardless of size, industry, and the nature of what you are intending to sell, establishing an organization for the sake of generating profit will require a lot of sacrifice. As well as physical resources, time, energy, relationships, and peace of mind are just some of the things that aspiring entrepreneurs must be prepared to exhaust the moment they decide to follow through with their start-up.

It doesn’t matter if you have the most innovative business idea of all or if you are the foremost expert in the field you’re about to enter; without proper knowledge of how to generate and handle finances properly, your business will fail. Of course, coming up with a business plan is the first step. After establishing the creative aspect of your business model, you need to determine your objectives, needs, and expected sales forecast based on the initial scale you have in mind. Once you have all of these set in place, you can start your pursuit for capital.

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Producing and managing assets are two very different things. While the first one will challenge mostly your creativity and resourcefulness, the latter requires more focus and organization. Here are some practical tips that can help you in both areas:

1. Ask Uncle Sam.

Believe it or not, the federal government is one of the best sources of funds for entrepreneurs managing the start-up cost of a business, even during times of financial crisis. One bureau to approach is the National Institute of Standards and Technology, a branch of the government that offers grants to co-fund “high-risk, high-payoff” projects with the hope of providing Americans a higher standard of living. However, keep in mind that government agencies get tens of thousands of requests for grants each year and are therefore are very selective.

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2. Look around you.

One of the biggest mistakes aspiring entrepreneurs make is being too focused on finding money outside their homes and not looking at existing resources that they can convert to cash. Do you have any clothes that you can sell at the local surplus shop? What about kitchen utensils you aren’t using or toys that you’ve outgrown? Be creative. There are many places you can go to raise some extra cash. Why not check out some freelance jobs on the Internet for some extra income?

3. Get a loan.

As an entrepreneur managing the start-up cost of your business, you should be aware that—unless you’ve got a lot of extra cash stored in your basement—you will likely need to apply for a loan. The trick here is to find the institution that will offer you the best terms. Don’t be afraid to ask around and try to get a loan that will be enough to cover all of your initial expenses and sustain your operation for 6 to 12 months. In that same vein, make sure that you do some credit monitoring as well. Checking your credit score at freecreditscore.com can help you narrow down your choices by giving you an idea as to which types of loans and interest amounts you qualify for.

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4. Acquire a credit card.

You may be thinking, “Isn’t getting a loan enough?” but chances are that it isn’t. Any business is at risk of failing due to a multitude of unforeseen circumstances, such as an increase in the price of raw materials, the sudden appearance of a formidable competitor, or even something as sudden as a tornado. It’s always better to have places where you can pull up extra funds in case of an unexpected incident. Again, checking your credit score prior to applying for a card is important because having lenders deny your application due to a low score can lower your score even further.

5. Practice good management.

So you’ve already acquired the funds you need for your business. What do you do now? Keep in mind that running a business entails a lot of strategizing and math. As an entrepreneur managing the startup cost of your business, you must be prepared to do a lot of management. Make sure every single thing you purchase is documented and properly categorized as either an asset or an expense. Keep your record books clean and your files organized and be sure to always maximize any resources you have at hand. These are the makings of a good businessperson.

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6. Don’t forget about credit monitoring.

Part of managing your business is making sure that all your payables (business and personal) are paid on time. Remember that you and your business’ credit score are now connected to each other, so be sure to always keep on top of anything that needs settling. The importance of doing this cannot be overemphasized. If you’re thinking of sticking with your business for the long haul, then keep in mind that regularly checking your credit score can help you get better business opportunities in the future.

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Last Updated on June 26, 2020

25 Easy Tips on How to Save Money Fast

25 Easy Tips on How to Save Money Fast

“How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

You don’t really need to order in food. You don’t really need to buy expensive perfume.

Building from that, you can work out how your regular expenses can be reduced.

As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

And remember: a budgeted lifestyle does not mean a bad or boring one!

But first, understand what budget you can cut down on daily:

  • Regular expenses for the average adult (can be trimmed but not eliminated):
    • food
    • rent/mortgage
    • cell phone
    • insurance
    • socializing/entertainment
    • transportation
    • hygiene products
    • household bills
  • Irregular expenses for the average adult (can be eliminated or cut down a lot):
    • travel
    • clothing
    • medication (*depends)
    • grooming (hair, nails etc.)
    • gifts

Now, let’s dive right into the 25 ways to save money fast:

Save Money on Food

1. Bring a stock of food to the office/work

Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

2. Buy the store-brand version

Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

3. Eat cheaper cuts of meat

Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

4. Have group dinners

If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

Save Money in Transport

5. Get a bicycle

Save on gas money and bus/metro fares with this underrated mode of transport.

6. Use public transport and/or don’t get taxis

Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

7. Find the cheapest gas

Regularly check out where the cheapest gas can be bought.

Save Money in General Shopping

8. Shop online

Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

9. Sell your old stuff

Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

10. Bulk buying stores

For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

11. Become a flea market/car boot sale/street market guru

You can find original gifts and develop good negotiation skills at these places.

12. Generic brand medication

More often than not, the generic version of paracetamol and other basics work the same as the branded version.

13. Choose deodorant, not perfume

It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

Cut Down on Household Expenses

14. Printing

Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

Expand the margins of what you are printing as often as you can to save on paper.

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15. Minimize SMS and phone calls

A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

16. Shop around for insurance

Most people don’t spend enough time searching for the best insurance deal.

Keep a watchful eye out for deals and new competitors in the market.

17. Try re-negotiating your rent/mortgage

If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

18. Don’t get a TV

Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

19. Pool your internet bill with a neighbour

My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

Save Money in Socializing, Entertainment And Travel

20. Have house parties

Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

21. Open festivals, meetups and events

It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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22. Volunteer

If you can’t pay for a ticket, volunteer and get to be there anyway.

23. Housesit

There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

Save Money on Hygiene and Beauty

24. DIY beauty

French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

25. Fewer haircuts/volunteer at a trainee hairdresser

If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

Bonus: Effective Money-Saving Tips for Everything

Here’s a summary of what you can generally do to save more money:

  • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
  • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
  • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
  • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
  • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
  • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
  • Stop and think. Do I really need it?

Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

More Tips for Personal Finance Management

Featured photo credit: Unsplash via unsplash.com

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