Entrepreneurs often operate on shoestring budgets. Their profit margins are narrow and costs have to be kept down. Both can cause problems as the business begins to expand.
To prevent a situation where cost gets out of control, ways of keeping expenses down have to be explored. This cannot be to the detriment of quality. A start-up still has to be able to provide good service. There are ways to be fiscally prudent and maintain high standards at the same time.
1. Don’t buy equipment, lease it instead. Office technology is constantly improving and everyone wants to buy state-of-the-art equipment. But new models become obsolete within weeks after purchase. Even better equipment is being introduced on to the market almost every month. An entrepreneur wants to have the best, but the capital outlay can be considerable. A better option is to lease the equipment instead of buying it.
Leasing allows an entrepreneur to have the latest equipment without having to make a sizable payment up front. Leasing also provides access to even better technology later on, because many leasing companies will offer the latest models as an incentive to renew the lease. The full cost of leasing equipment can be deductible from taxable income, and the monthly payments permit an entrepreneur to budget more effectively for expenses. The leasing company ordinarily takes on the maintenance of the equipment. For example, if a copy machine breaks down, the leasing company will make the repairs and depending on the lease will provide a temporary replacement. This permits business to continue uninterrupted. One cautionary note is that an entrepreneur should examine the lease language carefully. These can be very complicated documents and a good idea would be to have a lawyer review the paperwork prior to signing.
2. Rent only the office space you need. Renting office space is an interesting opportunity for any entrepreneur. Office space can be a sizable expense and many small start-ups only have a few people. Regus is a company that rents out office space in a rather unique way. With more than 2,000 locations globally, Regus will rent out conference rooms, short-term office space, and part-time offices. The company will go one step further and also provide phone answering service and mail handling for a start-up. If a small company needs a conference room to do a presentation for a client or office space for project teams only, companies can provide what is necessary.
This opportunity offers an effective way of keeping costs under control. A startup company can have staff work out of their homes instead of a fixed location. Any meeting or work session space can be secured through a provider such as Regus. An entrepreneur can get exactly what is needed for the amount of time the space is required. A part-time office, which may be for only five days every month, can be rented for as little as $100 a month. Space needed for a special project is possible for as little as $15 per hour. This is a much better solution than renting office space by the square foot, paying for space when it is not being used. These savings can be substantial.
Leasing equipment and renting space only when required are options an entrepreneur can consider for cost containment. In both situations quality is maintained, and a startup company gets exactly what is necessary without incurring major expenses. A small business that is establishing itself must spend money prudently and get as much return on investment as possible. The leasing and rent options are both ways to squeeze the maximum value out of every penny.
☛ Sameer Bhatia is founder & CEO of online learning tools provider ProProfs