Starting a new business is never easy. After all, there are plenty of statistics that define how often new business ventures fail. However, when you look at why failure occurs, it becomes rather obvious that a lot of it has to do with lacking capital and financing. In essence, a lot of businesses fail simply because they can’t get off the ground. A lot of businesses fail because they lack the working capital to get going. While saving money is extremely important for all businesses, an argument can easily be made that it’s far more important for entrepreneurs. So what’s the solution? Well, it starts by thinking outside the box and adopting some simple strategies to save money and reduce your costs of financing.
Bartering Services: The internet is full of websites that allow entrepreneurs and business owners to barter services amongst themselves. As an aspiring business owner, you have several competencies that could help other entrepreneurs get their own venture going. In return, you could lower your costs and save money. For instance, accountants often barter their services in exchange for marketing plans and strategies. Engineers and finance professionals do the same. In fact, there are multiple business functions that can be bartered. All you need to do is write down your capabilities and outline what you need in return.
Auctions and Liquidations: Unfortunately, today’s economy has taken a toll on businesses as bankruptcies are becoming more and more commonplace. As a result, many enterprises are liquidating their assets through liquidation centers and online auctions. These auctions provide new entrepreneurs with a great opportunity to get inexpensive office furniture, computers, cell phones, machinery and equipment. In fact, you don’t have to wait for an auction or liquidation to occur. You could contact businesses in your area and ask if they are looking to get rid of their excess furniture.
Lease Expenditures: Saving money and reducing financing are one and the same. The best way to retain more working capital is to lease expenditures and large purchases. Leasing is a fantastic way to save money and reduce your cost of capital. You can lease depreciating assets like office furniture, computers, mobile phones, photocopiers, warehouse equipment and machinery. There are multiple leasing options that allow you to retain more working capital in your business, while allowing you to upgrade your purchases to stay up-to-date with the latest offering.
Using Third Party Warehousing: Many new businesses save money by using third party warehousing and distribution. Using third party warehousing helps to reduce your costs by allowing you to reduce the costs of warehousing and storage. In fact, this approach is a fantastic solution for those new ventures that need to reach their market. Instead of opening up a warehouse of their own, they can use a third party distribution center to manage their inventory of finished goods. In some cases, they can rent out warehousing space from local businesses.
Alternative Financing, Prepayment and Prepaid Contracts: A great way to save capital is by investigating alternative financing options like invoice factoring and purchase order financing. Both allow companies to use the value of current purchase orders and unpaid invoices as business credit. Additional strategies include prepayment and partial prepayment of orders, in addition to prepaid contracts. Offer customers an incentive to prepay or partially prepay their orders by reducing pricing, reducing invoices and or reducing the costs of future contracts.
Take the time to investigate these aforementioned options. There are plenty of ways to save money and get your new business going. Bartering is simply a matter of identifying what you need and what you’re willing to offer in exchange. Auctions and liquidations are great sources of inexpensive equipment and office furniture. Leasing allows you to keep more capital in your business. Third party warehousing is a proven solution that reduces costs. Finally, investigate factoring and purchase order financing.
This article was written by Karl Stockton for the team at http://www.insuranceswami.com.Subscribe to the Podcast