When starting out in business regardless of your sector, chances are that you’re going to have to spend a bit of money to get things up and running.
It’s a crucial time, and the decisions you make around how you spend your first bit of capital can have a lasting impact on the success of your business.
Whether you've bootstrapped, raised investment, or received money through BizBritain via the Start Up Loans Scheme, it’s imperative that you spend your capital in the correct areas. It can be tempting to fritter money away on things that seem important and the time, but in reality you don’t really need. We’ve outlined a few tips below on how to avoid common mistakes and spend your start up capital wisely:
Don’t waste money on fancy stationary before you need it
Things like professionally printed letterhead paper, compliment slips, and flashy business cards, may seem like a great idea when you’re starting a new business, but in reality they are pretty unnecessary until later down the line. Business communication that once would have required these things is increasingly being done using email and Social media. If you need a small run of cheap business cards to take out networking that’s fine, but don’t spend hundreds of pounds on getting flashy stationary printed for it just to end up sitting in a draw somewhere.
When buying equipment, get what you need, not what you want
One of the biggest errors we see people making is wasting money on unnecessary equipment. If you need a laptop, great. It’s a pretty essential tool for many businesses. But if you are using it mainly for writing emails or creating documents in Word or Excel, don’t go out and spend £2,000 on a brand new MacBook Pro simply because you want one. The majority of the time a Windows based one costing under £500 will be more than sufficient (and more suitable for office based tasks).
Buy second hand if possible.
If you need to buy fixed assets such as machinery or equipment, it’s always worth seeing if you can get hold of it second hand. For example, you may be a photographer or filmmaker in need of camera equipment. It’s more than likely you can get top spec equipment from the likes of ebay which is in perfect working order, and will cost you half as much as when buying new. You can always replace things later down the line when your business is generating enough income.
Only borrow what you need.
While is often be necessary to borrow money to get yourself started, it’s best to make sure that you are only borrowing the minimum you need to get yourself started. The more money you borrow, then more you will have to pay back...plus interest. At BizBritain, when working with Start Up Loans applications we make a point of working with our candidates to make sure that they have a solid understanding of exactly where their funds need to be spent to avoid waste and unnecessary costs.
If you need money to start your business, BizBritain are a National Delivery Partner of the government backed Start Up Loans programme, and we can help you to apply. Please click the following link if you would like to find out more information about Start Up Loans and how to apply.