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Keeping Expenses As Low As Possible

January 1, 2006

Q - I want to start a business and keep my expenses as low as possible so my risk is less. I do not have a lot of money to invest in this business. What suggestions do you have to keep my investment to a minimal amount?

I applaud you for trying to keep your risk and expenses down. Going down this route will really help raise the probability of your success.

First, I encourage you to operate out of your house, if possible, for as long as possible, to avoid paying rent. If you have to meet clients, just meet them in their offices or, if you have to, rent a small meeting room. I also encourage you to hire a professional answering service, so a live operator answers your calls. Such a service conveys a professional image for your business at a very low cost.

Second, find a mentor who can guide you through the pitfalls of starting a business. A mentor can help you avoid costly mistakes because of his or her experiences and knowledge. Normally, the only cost for a mentor is the cost of a lunch or breakfast for you and your mentor. You can find a great mentor by checking with your banker, accountant, or attorney for folks who might be of assistance to you.

Third, look carefully at every expense to see if you the expense can be delayed. Even if it is cheaper per page to order 2000 sheets of stationery, see if you can get by with 100 sheets. The more costs you defer, the better, because you conserve your cash flow.

Finally, if you feel comfortable doing so, ask some of your family members to help with some of the tasks of running your business -- just during the initial stages till you get operational. Usually, the two areas entrepreneurs need help with are accounting and marketing. A relative with accounting and marketing experience might really help you to minimize some of these expenses. If you do not have someone to help in these areas, find someone who is willing to work with you at a very low initial cost, but is very competent.

Your overall philosophy must be to make sure every dollar you commit to your business in the beginning is really needed and will produce an immediate return. The more expenses you can keep reduced or postpone, the more cash you will have to invest in products and services to serve your customers. You can do this!