Greetings, Frugalists! We have a guest blog today from Barry J. Moltz. Barry has founded and run small businesses with a great deal of success and failure for more than 15 years. His first book, “You Need to Be A Little Crazy: The Truth about Starting and Growing Your Business” describes the ups and downs and emotional trials of running a business. His second book, “Bounce! Failure, Resiliency and the Confidence to Achieve Your Next Great Success”, teaches how to gain true business confidence.
For those with an entrepreneurial spirit, here are Barry’s three ways to not break your budget when you are starting your own franchise:
You are no longer working for someone else. No more expensive two-hour lunches. No more time killing games in your cubicle. This time, it’s your money so you need to be frugal and practical.
1. Never Pay Cash: Regardless of what you buy, try to get 45 to 60 day terms to pay for it. If you can’t accomplish this, then pay with a credit card right after your statement comes every month. This will at least give you 30 days to pay for your purchase. Better yet: After getting 45 to 60 days to pay, see if you can pay then with a credit card- that will give you a 30 day bonus!
- Hire No Employees Before Their Time: Try to keep all of your people resources variable and available. Don’t hire company employees, but use independent contractors (pay attention to the rules around using them). Better yet: Do not stock inventory. Have orders drop shipped to your customers.
- Stay Virtual. Don’t grow yourself broke by increasing your fixed overhead costs for your business. Unless you are a retail store, try to put off committing to expenses like rent, furniture, and phone systems. Work out of your home or favorite local coffee place that has free Wi-Fi service. Better yet: Go visit your customers. You are more likely to make a sale by building a personal relationship with them.
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{ 6 comments… read them below or add one }
I really do like these tips and I will be sure to put them to good use when I begin my business.
THanks
Tip #1 sounds like a good way to run your business in the red (i.e. no profit), and tip #2 is a slippery slope to unethical business practices and lawsuits. If you’re operating in a deficit, you’re not going to have the cash to hire lawyers, now, are you?
@Mary Sue
For #1, this is just to help cash flow- you need to have the money when the bills come due!
For #2, I do not see this as a slippery slope as long as you follow the independent contractor rules!
1) make sure that your business plan is Rock Solid!
2) consider hiring a lawyer to make sure that you protect your intellectual property
3) make sure you have a 6 month to 1 year cushion for personal living expenses
PJD-I know your business will be a good one!
Mary Sue-Interesting points!
Barry- Thanks for contributing!
GLM-Sage advice. I forgot about the savings. Thanks for reminding me of the importance of having a cushion!
Funny this article would come up now our business plan calls for virtual offices based on our live/work living arrangements. Our Corp. office is also our home or loft to be more exact. We can get up go down stairs to the office space (side) part of the loft and be able to work. It also helps that we share this space with a recording studio with Twin producers (music producers). This way we keep our overhead low and since our business uses RF technology, GPS units and a online reservations system. We have no need for additional employees. Until the system crashes lol… We intend to grow the business based on out sourcing our sales to a sales company to eliminate HR or payroll burdens…you can check out more at our blog at: http://growverde.blogspot.com/