How to Survive on "Slim Pickings" When Starting your Company
If you're like most franchisees, funds will be tight in the beginning. Not only are you starting something that isn't yet profitable, there are a huge amount of expenses coming in all at once. Think of it like moving: once things are all set up, it will be more than worth it, but in the meantime you have to stretch to make ends meet.
Remember, it will all be worth it once your business is up and running. Consider this period "fancy juggling" wherein you have to sacrifice a little in order to gain a lot.
This is nothing out of the ordinary – it's a reality that almost every single franchisee runs into when starting out. Even those who have excess cash to throw around know it's smarter to remain frugal from day one. No matter what type of financial situation you're in while starting out, you aren't alone. And there are plenty of steps to help make your reality easier – without overloading your bank account, and without causing too many sleepless nights.
First off, set a budget. You know how much you have to spend, how much certain certifications will cost, as well as overhead with deposits like rent, utilities, and more. Take note of these numbers and lay them all out so you can know what's going out and what's coming in at all times. Even if you have an accountant (another expense to put on the list, BTW), it's good to keep this information all in one place. It's a setup where you can adjust if needed, and keep a close eye on how much money is available at any given time.
Next, consider due dates and timelines. If you are going to be too tight one week, it might be a good idea to file your next bill until the next Monday, and so on. (That is, when funding the venture out of your own pocket.) Be sure that everything is paid, up to date, and on time. But also that you aren't hurting your business overall – for instance, pushing back your open date – due to unpaid bills.
If you're using an investor or gained access to financing, there will likely be less juggling. Instead, you can keep your funds secure in the bank, and write checks as needed to cover your expenses.
It's also a good idea to cut down your personal financial needs so you aren't overwhelmed for the next few months. If you can downgrade a vehicle, lower your cell phone data plan, cut the cable, etc. – whatever you can trim down to lower your monthly expenses can help as you're starting out. Or, set living funds aside and stick to those numbers – this is ideal for those with a family or who don't wish to remove certain amenities.
You can also refrain from eating out – pack a lunch or snacks while on the go. Meanwhile, use your current wardrobe to attend meetings and work obligations. You can still look nice, then upgrade once more money is flowing in. Also, cut out social (and expensive) memberships or see if there's a way to put them on pause.
Finally, don't overspend with your company. It can be easy to go for the biggest and the best, but it's more important to know that you're financially set. That certainly doesn't mean "cheaping out," but it does mean avoiding unnecessary price tags. When in doubt, ask your franchising brand what they recommend. Or, check out what others have done so you can get an idea of what's "normal" vs. what's going overboard.
As you're ready to start moving forward with your company, know that there are plenty of steps that can be done to cut your budget. Follow these frugal spending tips to become profitable, and to avoid stretching yourself too thin in the process.