New companies don’t necessarily have millions of dollars in the bank or the backing of a large investor to ensure that it has the money needed to operate at a loss. In many cases, startups are funded with little more than what their owners have in the bank. Therefore, it is important that you understand what lean methodology is and how it can help your business survive long enough to eventually turn a profit.
Identify Waste
There are many different ways in which a company could be wasting money such as paying employees too much or hiring employees instead of freelancers. Chamberland Business Accounting says it may also be a bad idea for startups to lease an office building or otherwise pay for space that they don’t need at the moment. Consolidating or otherwise refinancing corporate debt could save an organization hundreds of dollars per month or more. Eliminating waste may make it easier to develop products faster or sell them to customers at a lower price point.
Evaluate Your Assets
According to Visible Equity, many environmental or qualitative factors can apply to individuals even under the new model of loan evaluation. These include credit information, nature of financial assets, lending staff, general market conditions, and so much more. It is important to understand that not all assets are created equal. For instance, a piece of land or heavy machinery could be worth more than a brand-new laptop. If your company is experiencing financial woes, your most valuable assets are the ones that will ideally be sold or used as collateral for a loan.
Never Be Afraid to Negotiate
In some cases, the smallest cuts are the ones that can save a company the most money. For instance, getting a distributor to charge 10¢ less per unit shipped could save the company thousands of dollars a year. Your company could also obtain big savings by asking a supplier to decrease its prices by 1% or offering some other price break. According to Credibly, distributors, vendors, and other suppliers will work with you on price if it means securing your business for the long-term.
Adopting lean methodology for your startup’s finances can help you save a lot of money without making huge changes to how your business is run. By eliminating waste, your company can run more efficiently and scale at a faster rate. This can result in a happy owner (you), happy workers, and happy shareholders who will be more likely to promote your brand to everyone they know.
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