Avoiding Financial Pitfalls When Starting a Business Amidst COVID-19

If you’re eager to start a business, the coronavirus pandemic shouldn’t stop you. After all, if you’re waiting for the perfect timing, you’ll be waiting forever. Nevertheless, COVID-19 has posed a range of new obstacles, which is why you must adapt to those issues. Above all else, you must go the extra mile to ensure that the venture runs in a financially efficient manner. 

Keeping the costs low via less financial waste will counterbalance the reduced revenue in this economic climate. Avoid the pitfalls below, and your new venture will have a far better shot at navigating this difficult period.

Hiring Too Many Employees

Managing an entire business is too much work for one pair of hands, which is why surrounding yourself with a winning team is essential. However, you must avoid the threat of completing unnecessary recruitment drives. After all, staffing is likely to be the most expensive ongoing overhead that you will encounter.

It’s still important to recruit reliable employees to form the core of your team. Nonetheless, there are multiple ways to overcome the commitments of permanent full-time employees. The gig economy is a great way to fill temporary roles. This could mean using graphic designers on a project-by-project or using a range of similar agreements. Aside from removing financial waste, it makes the admin far easier to manage.

Furthermore, you can look to outsourced services. Whether it’s IT management, cleaners, or customer support teams doesn’t matter. Once again, paying only for the work that’s required allows you to manage your staffing budget with greater control. Better still, using off-site services can reduce other operational costs. 

Choosing Unsuitable Workspaces

Like staffing, the process of finding a workspace is an essential feature but can also drain your capital if you’re not careful. When looking at retail outlets for your company, it might be better to consider pop-up stores. This allows you to test the waters before making long-term commitments. It also offers flexibility to hit several territories.

Away from the shop floor environment, the company may use a variety of workspaces. The key is to balance workload requirements with financial costs. As a new company, you cannot accurately predict what will happen in the years to come. So, finding a flexible private office space for rent is ideal. The fact that the rentals can evolve in parallel to the evolving requirements of your business puts you in far greater financial control.

Whichever space you work with, it’s vital that you make the most of it through good organization and storage. Adding a mezzanine floor can transform a variety of workspaces while going paperless can help too. If your business craves a prestigious address but doesn’t need to work from one, virtual addresses and mailbox services are ideal.

Marketing To The Wrong Audiences

Effective marketing will always go a long way to dictating how the company performs. If you can attract customers to the business in a cost-effective manner, the road to success will be a lot smoother. First and foremost, though, you must stop marketing to the wrong people.

Creating an ideal consumer profile and targeting your content to suit them is vital. This will help you set parameters on who sees your paid ads, so that you stop wasting money on uninterested parties. It is a crucial step that can additionally help you make a stronger first impression. Conversely, it is very difficult to build a winning bond when generic ideas fail to resonate with your target market. This could cost you a lot of sales in the long run.

Marketing shouldn’t only focus on using cost-effective platforms like social media, SEO, and site. Most consumers will want to discover what other people are saying about the brand. Social media influencers and affiliate marketers are ideal additions to your marketing arsenal. Not least because referrals are paid after the sales have been made.

Not Using Your Time In Style

It’s the oldest cliché in the business manual, but time is money. Therefore, every new entrepreneur should show an eagerness to cut out any sources of wasted time. In today’s climate, the increased use of automation is unquestionably one of the best ways to do this. It will bring an increase in productivity speeds while also removing delays due to communication.

Maintaining strong communication shouldn’t be limited to productivity, though. Long business journeys can blow a significant hole in a startup’s capital reserves while also distracting you from other work. Video conferencing software and equipment will enable you to avoid those journeys. Habitual changes are highly beneficial too. Cutting team meetings to no longer than 20 minutes, and using team messaging and project management Apps will serve you well.

On a separate note, you must ensure that your time is spent on the most significant matters. In your position of power, handling basic bookkeeping or doing the morning coffee run. Scheduling your time effectively will have a telling impact on the company’s output. Similarly, avoiding jobs you’re not confident allows you to manage your time with confidence too.

Ignoring Better Deals

In business, you will use a lot of different materials, products, and services. While it may be tempting to take the first option you see, the truth is that you must seek the best value for money. The cheapest option isn’t always the best route to take. You should always be ready to search the market for cost-effective alternatives that can improve your approach.

For starters, you should research the best web hosting services. Packaging materials, delivery services, and energy rates are all key features for the checklist too. It’s a concept that should extend to instances where you need a plumber, accountant, or attorney. When you can reduce the costs on the items that don’t directly impact the product, it builds a stronger platform. Meanwhile, you can try to negotiate on subscriptions or look for possible loyalty schemes.

This concept can be further supported by analyzing whether tech investments and in-house work could save you money in the long run. For example, using 3D printing to prototype new products or replace faulty parts rather than wait for deliveries is a great example. Thanks to the array of data now available, you should be able to make calculated decisions. 

Taking On Bad Debt

As a business, you will need to borrow money from time to time. Avoiding hidden fees and high-interest costs is naturally a vital step to keep your finances in good health. However, it’s not only the financial terms of being a borrower that matter. In truth, the situation when you’re a lender is arguably far more significant. You simply cannot afford the bad debt.

When you are selling products on repayment plans, bad debts come from clients that are unable to fulfill the commitment. If they file for bankruptcy, for example, you may have to forego the monies owed. Running full credit checks will reduce the frequency of this happening. Charging interest rates can help cover the funds lost through bad debt. Given that you’ll have counted on that money in your business accounts, getting this right is vital.

The thought of rejecting a sale due to someone’s poor credit score can feel like lost revenue for a startup. Ultimately, though, it’s a form of risk management that you simply cannot afford to ignore. When used in conjunction with the other steps mentioned above, keeping your finances under control is far easier. As long as your products and services meet the right standards too, success is assured.

Credits: Free-to-use photos by Per Lööv on Unsplash and Afbeelding van 3D Animation Production Company via Pixabay