Like renovating a house, it’s easy for new business owners to get caught up in the excitement of the project and exceed their start-up budget.

Your new business needs time and money to find its feet. Scrutinize every expense – especially within these three categories known to consume the most money.

• Employees. Paying people is a huge financial commitment and usually represents the biggest cost to a company. You may be able to get the services and talents you need from a supplier, instead. For example, you could acquire the graphic design services you seek from a qualified design firm as an alternative to directly hiring an individual.

Explore ways to get the work done using virtual assistants, freelancers, contract workers, vendors and temporary agencies.

• Commercial lease. Your own business space can be expensive. And, sometimes, business space is unnecessary or premature. Explore some options. Can you sell your products or services through a website instead of a storefront? Can you negotiate kiosk space with a complementary retailer? Is there room at home to set up working space rather than renting, staffing and equipping a formal office?

• Advertising. Your young business is finding its voice, confirming its target market and identifying competitors. Sinking a lot of money into advertising while you find your way may prove to be a waste of scarce financial resources. Consider engaging less expensive marketing tactics until your young business finds itself – such as networking.

Set a launch budget.
How much money do you need to start-up? A conservative start-up budget should include all of your one-time capital costs (such as equipment, legal fees) plus six months’ worth of operating costs (office rent, telephone, salaries and promotions). Add 10 percent to the budget for safety and cost overruns.

• Use the Scotiabank Plan Writer for business tool to develop these strategies.

Starting and running a business is all about creativity and perseverance. An open mind will help you to embrace innovative ways to reduce your cash outflow. Perseverance will help you to reach your business goals using whatever resources are available to you.

Ask your Scotiabank Small Business advisor about the banking package called Running Start for business.

How are you managing cash flow for your new business? What drains your money? Please share your insights in the comments section below.

By Roger Pierce