If you’re thinking of starting a business, you’re likely saving every penny to ensure your launch is a success. But it takes time for that savings account to grow. A recent study shows the cost of starting a new business from scratch averages about $30,000. Once you have your startup funds, you’ll want to use every dollar wisely.
To ensure your financial fitness, entrepreneur Eli Goodrich, who helps startup companies acquire sales with his company, Game Changer Sales, says most new business owners shell out lots of money on unnecessary startup costs.
“It’s not about being cheap, it’s about setting financial priorities,” he says. “Startup cash is hard to come by, so make sure every purchase you make is important to your company.”
Here are a few money pits you can avoid as you begin your new venture:
1. Hiring a lawyer or online company to file startup paperwork
Whether you plan to set up an LLC or a corporation, you don’t have to use an expensive online service or an attorney to get the paperwork completed and filed correctly, Goodrich says.
“A lot of small business owners think, ‘I better do this part right so I should pay someone to ensure everything is done correctly,’” he says. “The truth is, all the forms you need are on your state website. Go there, print them, fill them out and send them in. That’s it.”
2. Hiring an accounting service
Whether you’re starting a company with two employees or 10, you don’t need an accounting service to handle your bills, Goodrich says.
“If you’re starting your own business, you should have some number knowledge and with the help of free accounting software you can tackle this task yourself,” he says. “Paying another company to crunch your numbers will eat away at your startup funds.”
3. Paying for phone services
Before you go out and sign up for a company cell phone plan, you may want to look into some other free options.
Goodrich uses a Google phone number for all business calls and freeconferencecall.com when he needs to get a number of people together.
“You can sync your Google number to your personal cell phone, which is handy,” he says. “The conference call site is flawless. I’ve never had a problem.”
If you can utilize these free tools, you’ll avoid a monthly bills, Goodrich reminds entrepreneurs.
4. High design costs
Small businesses tend to overspend on logos, Goodrich says.
“Every small business owner wants a sharp logo, business cards and letterhead, but there is no need to shell out massive amounts of money for any of these items,” he says.
Have a friend do it or use a freelance site like Elance.com, where small business owners can post a project online and receive quotes from specialists. Goodrich used a freelance site for his company logo and he only paid $150.
For Goodrich, the key to handling startup costs is research. Before committing to any service, do a little homework and see what kind of options are out there that are free.
“If you use your business smarts to save some money, especially up front, you’ll have a better financial cushion,” he says. “That will allow you to focus on customers, rather than bills.”