How to Keep Start-up Costs Low

How to Keep Start-up Costs Low

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This is a guest article contributed by Daniela Baker*.

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The success or failure of a business depends on how wisely you allocate start-up funding. As a solo-preneur you can monitor every expense and decide where your money will best be spent to get your business off to a good start. Here are four suggestions for controlling start-up costs.

Be Flexible & Smart With How You Get Funds

The cost of borrowing, along with the terms attached to most loans, can make them quite prohibitive to the small business owners. However, there are several other options new business owners may consider when seeking inexpensive and flexible financing. One of the most common methods is to raise capital from family and friends as these loans often offer attractive terms with very low, if any, interest.

Geoff Morris, chair of the Entrepreneur’s Forum, is a strong proponent of this approach. Mr. Morris advocates the use of funds from family and friends since terms are favorable with low, if any interest.

Keep in mind that borrowing from family and friends could put a strain on these relationships if the business does not grow as you had anticipated. For this reason, it may be best to borrow smaller amount from a wider range of people than large amounts from just one or two.

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Think About Your Office Space

As a designer or freelancer it is likely that you will be working out of a home-based office so this may not be a significant issue. Too many new business owners fall into the trap of spending too much money on the trappings of a luxury office. As per Mr. Morris, new business owners should use utilize extra space in their home, even the garage for as long as is feasible. Another possibility is to join a start-up incubator. An incubator is a great option for new entrepreneurs as these spaces typically provide access to a copier, scan, telephone and fax services. Not so incidental is that an incubator also permits you the opportunity to interact with other start-up business owners for support and camaraderie.

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Consider Your Options for Computers / Equipment

As a modern designer, it is is more than likely you will need a computer / laptop with a consistent Internet connection, along with software. The next step is to identify the least expensive option for purchasing these products. One idea for new business owners is to rent and lease a laptop rather than purchase, since this gives you the flexibility to change models as your business grows. Because a computer is essential to your business as a designer, do not shortchange yourself in this one regard. Also, remember there is no magic button.

Use Low-Cost Marketing Strategies

There are several low-cost strategies small business owners may employ to keep marketing costs down, especially with social media. Create a page on Twitter, Facebook and LinkedIn and engage prospects with status updates that pose questions or ask for feedback. Engage with your network. Join discussion groups or start a blog to become recognized as a thought leader in the field. Email can be used to promote special offers. Write an article or series of articles and submit to article directories or as guest postings on the sites of colleagues.

Do you have any other tips to help keep start-up costs low?

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*Daniela Baker is a small business blogger at CreditDonkey, where she helps startups compare small business credit cards to maximize rewards.  She says, to sum up the philosophy of start up costs: Spend small to grow big! Also consider working with wholesale companies such as Schaefer Systems International which can help you save a lot. Photos by Shutterstock.

11 thoughts on “How to Keep Start-up Costs Low”

  1. Smart advice. It’s definitely very easy for small business owners to start spending too quickly on things they don’t need (and, to be fair, just as common for them to not spend enough on areas they *do* need).

    When it comes to low cost marketing strategies, be wary of focusing too much on discussion groups and blogging purely within your field. E.g. if you’re a web designer, other web designers are unlikely to be your main target market. Make sure that you focus on areas where you’re engaging with potential clients, and not just peers. E.g. small business forums and groups, offline social networks that aren’t specifically technically focused.

    In terms of office space; home is great, but make sure to differentiate between being “at home” and “at work”. And one important consideration is finding somewhere that’s convenient and professional in which to meet clients. Not all clients will want to always meet at their offices; and your home office may be unsuitable.

  2. Great article to start off the year. Keeping costs low is extremely important for freelancers. Always look for ways to pinch a penny. Business meetings with clients at Starbucks. Using other peoples resources are always a positive, it is not tacky and they have great coffee.

  3. Good tips –

    When we started however I made the mistake of NOT upgrading my CPU to a flash hard drive (to speed things up). After I did I realized I could have saved days of my time from the first year with a faster CPU.

    So my advice is that if your startup is tech related… spend on the tech a bit more.

  4. That is true, Jacob. As an author and business man, I can relate to how you said, “Keep in mind that borrowing from family and friends could put a strain on these relationships if the business does not grow as you had anticipated”. I hope more people discover your blog because you really know what you’re talking about. Can’t wait to read more from you!

  5. I agree about almost everything. The only thing that I don’t like is borrowing money from friends and relatives. As soon as money becomes and issue in these relationships, something changes. It’s not worth it.

  6. I have one good tip for the computers/equipment area – rent your design software.

    Adobe -was- offering CS Subscriptions so that you could “subscribe” for a license on a monthly basis. They’ve recently stopped doing that, but Creative Cloud is going to be released soon – similar concept.

    Starting out it might be a good idea to bundle the cost of, say, a 1 month Creative Cloud license in with a project in order to keep startup costs minimal.

  7. Excellent information. And yes, working from home does have it’s challenges. Especially if you have a ‘vibrant’ home life such as a spouse and kids! Being able to separate work time from family time is paramount.

    Using social media, word of mouth and good old home printed flyers or hand outs have been a way I keep costs down also.

    And I agree with Robin that blogging and such within your field only, isn’t the best way to use that particular asset. You would do much better engaging with small business groups to acquire new business.


  8. Basic, yet essential tips in this article. People putting a small business with a low costs start-up will benefit and learn from this article and advice. Thanks for sharing!

  9. Hi Jacob,

    Great article. 🙂 Totally agree that so many small business let costs get out of hand and are not well equipped with marketing strategies. I strongly believe as a freelancer that one must not borrow money or capital.

    I took time to learn marketing strategies and now am inundated with freelance jobs and contracts.

    Whenever I have a project that I can’t handle alone, I recruit another freelancer to help me out. Networking is the key.

    Also we have just started a nifty job Board website catering for Creative Jobs. I would be honored if you could review it for us. You can find ‘Creative Jobs’ at

    My Portfolio is available on:



  10. Daniela, Thank you for the great insights and Thank you Jacob for bringing it out to us in your space.

    Pleased that my check-list of a safe practice for a start-up correlates with your suggestions here….having started on my own at Dubai Media City this Feb, I think I am more confident after reading your post here.


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