MBA2452 How To Save Thousands When Starting a Business

0:28Heyo! Welcome to the$100 MBA show. the beginning. You're in the red already because you're going to spend some money to get started, to get things in place, to build your website, design it, software tools. Maybe you need to buy some stock or inventory. There's some upfront capital that you're putting up to get the ball rolling before you even make your first dollar. So in today's episode, I'm going to show you ways to save thousands of dollars, literally thousands of dollars in your first year of business. I'm going to save you lots of money on regular expenses that you would normally pay for.

0:59These are practical ways. These are ways that you can implement right away. I'm not talking about applying for grants that can take months or even years. I'm talking about ways for you to save money so you can start making money easily without the burden of a lot of overhead. So let's get into it. Let's get down to business. If you're a listener of the show, you know how much I think that the finances of your business are so important. Having that P &L sheet, that profit and loss sheet, making sure that you are making more than you're spending is going to allow your business to survive and then thrive.

1:31If you're burning money, if you run out of runway, you die. That's it. The business is over. So you got to make sure you keep your expenses down, especially in the beginning of your business, because when you're getting started, you're not making a lot of sales. You're still trying to get your first customers, trying to get some momentum. You're trying to gain some credibility in the market, Get testimonials and then lean on that so they can get more business. This is why it's so imperative to keep your running costs to a minimum. I'm going to get started with the number one way to save money when you're starting a business.

2:05And it might sound counterintuitive, but trust me, this is gold. Join a startup hub, a co-working space, a shared office that champions new businesses. There's a lot of co-working spaces that have incredible benefits and some amazing freebies that come with membership. Now, you might be thinking, Omar, I'd rather just work for my cafe or work for my home. I'll save money on rent. In the long run, you're actually going to make a whole lot more. You're going to save a lot more. For example, there's a co-working space in Sydney called Fishburners. It's dedicated to tech startups. There's plenty of startup hubs like this across the world.

2:47Now, as a part of Fishburners, when you sign up and they have different kinds of memberships, they have, you know, hot desking, you have your dedicated desk. They even have like virtual memberships where you get some benefits for a minimal price, meaning you only spend like $100 a month. But I actually would recommend actually getting a space, whether it's a hot desk or a permanent desk in a space like this, because you're going to need the discipline of going somewhere in the beginning. You're going to really benefit from the network and the people going to meet and all the great resources to learn from, whether it's pitch nights or free classes or free workshops.

3:20But best of all, these spaces come with over$200 ,000 in benefits. Where do these benefits come from? What am I talking about? Well, there's a lot of companies that sponsor these spaces or at least give amazing deals to those who are part of these communities. For example, you can get$10 ,000 worth of Amazon Web Services hosting, if you remember. For a lot of people, that's going to be enough for the first few years of their business to host their website, to host their app. And that's just one of the benefits. Why would Amazon do this? Well, they know that if they get people to start with them, they will continue to use them after their credits run out.

4:06But it's not just Amazon. It's all kinds of tech companies. Payment processors like Stripe will give you free processing for a certain amount of money. Intercom Helpdesk will give you free credits. Google will give you free email or hosting credits. There's so many great benefits that's going to save you literally thousands of dollars by just being a member of one of these spaces. So take a look at your local community. Take a look at your city. Just Google co-working spaces, startup hubs, and go to their websites and see what kind of benefits they offer. Many businesses, including mine, save really a lot of money by just being part of these communities.

4:44Now, if there are no communities around you, you can always go and reach out to some of these companies like Amazon to host your website. And they have sort of a program for startups where you fill out an application and they can give you credits. It's probably not going to be as much as being part of a community. It might be$5 ,000, but it's something. Many people don't know about this, but I'm telling you because it is so, so valuable. On top of that, by being part of these communities, there's lots of freebies like free parties and free dinners and free drinks, pizza nights on Friday. You're going to save all kinds of money and you're going to get the support of a community around you so that you can ask questions, you can get advice and get mentorship.

5:28Next, don't spend any money on any software that you can start for free. There are a lot of options out there. And you can go for something fancy and expensive, or you could just go with the best option for free. Like, for example, ConvertKit has a free plan. MailChimp has a free plan. And it may not do all the bells and whistles, but it'll be enough for you to get started. And once you start making money, then you can upgrade to their starter plan and pay monthly. But this goes for any kind of software. There should be some sort of free tier for some company to do the thing you needed to do. Those little expenses of softwares and services, they can really eat into your budget.

6:11They can really eat into your expenses. And it's like death of a thousand paper cuts. Cut it off from the start and go free before you start paying. Another option is lifetime deals. There's a lot of new companies coming out looking for new customers to validate their company, to get feedback, and kind of see it as an injection of cash. And you can find a lot of these companies, a lot of these different tools over at AppSumo.com. This is a great site to find basically lifetime deals on any kind of software. Some of these are going to be great, and some of them won't. I bought a lot of AppSumo products over the years, bought maybe around 30 or 40 products over the years.

6:50and I would say from the 40 products I bought, about 15 were brilliant. Like to this day, I use them. They're incredible. Five are good and I use them and the rest kind of forgot about them and maybe they're not so great. So it's kind of a 50-50 chance, but if you read the reviews, if you take a look at all the comments, you can get an understanding if this product is going to be worth it. And again, it's a one-time fee and you get to use it for a long period of time. For email marketing, for example, there's SendFox. That's an AppSumo product. For calendars, for people to book you on your calendar, there's TidyCal.

7:26You pay once with TidyCal, it's$29, pretty cheap, and you never pay again. So lifetime deals can save you a lifetime of money. My next tip is to pay as you go. Whether you're hiring a service, a person that's going to work for you, or a software or any kind of reoccurring activity, I would do pay as you go at the start because you're only going to pay for what you use. Because in the beginning, business might not be super fast. You may not have a lot of business coming in. So you don't want to have a flat fee or a expensive fee every single month. You want to just pay for what you need. And therefore you can cover that payment with what you actually earn from the actual business you get via using this service.

8:14So for example, freelancers buy a package of hours instead of hiring them part-time or full-time. I've done this for years because you're not gonna need them to be on retainer or just be there working all the time when your customer flow or the flow of business you're getting in your company is not that consistent. You only get them to work when you need them and you pay for what you use. very, very good way to keep your budget from exploding or really ballooning to an amount that you can't pay. Pay as you go is the way to go. I got two more tips when it comes to saving thousands of dollars when you're starting a business.

8:53If none of the options I gave you help you in any way, these two options can. Say, for example, you have to use a service or you have to use some sort of software and you have to pay for it regularly. There's no options for lifetime. you don't have the option of getting it for free through a co-working space, no worries. Call them up, email them, and negotiate. This is normal. They are used to people negotiating. And if you're new, they would love to negotiate with you and give you a deal because they know that if they give you something, if they give you a favor, they do you a solid, you're going to remember and you're going to be a lifelong customer.

9:32So I've done this in the past where I email them and say, hey, I'm a new business. This is what I need. Is there any way you can give me a introductory offer, some sort of discount, even if it's like an annual discount? Can you give me 30 % off an annual deal or give me some sort of coupon I can use for my monthly expenses or monthly plan? I've been in SaaS for over 10 years and every company has some leeway, right? The agents you're talking to most likely have authority to give a coupon, a discount, of some level. If they can, they can escalate it and get somebody to help. Somebody that can actually give you a discount.

10:11Negotiating works. You only get what you ask for. So ask. Now, for my final tip, sometimes when it comes to software, when it comes to even services and skilled labor or skilled workforce, sometimes it's better and more affordable for you to build it yourself. For example, I was looking for a piece of software to put into my WordPress website to track lesson completion inside of the$100 MBA. There are pieces of software that do that and it would cost me about$30 a month. I did some quick math and I thought, hmm, that's$360 a year. Over three years, that's like$1 ,000. I'm definitely going to be using this for over three years.

10:51How much would it cost me to create it myself or to hire somebody to create this little feature in my website? I went to Upwork.com. I contacted a freelancer. I interviewed a few people, I actually got it done for$200 for less than a year of this plugin. So sometimes creating yourself is cheaper. Same thing goes with services. If it's a skilled job that can be taught like video editing, audio editing, social media marketing, graphic design, you might want to hire someone who's a quick study that has good communication skills, that is hardworking, that is entry level, or maybe has some experience, but not in those areas.

11:29And you train them, You buy an online course and you allow them to take it. You give them time to experiment, to try things, to build things, and you cultivate their skills. You might spend a quarter of the salary you would normally pay because you invested in this person. And guess what? They're going to love you for the fact that they've learned so much and they've grown. And now they have a new career because of you. Sometimes building it yourself can save you lots of money. Well, there you have it, guys. I hope today's lesson helped. If it did, the best way to show your love is to subscribe, to follow our podcast on Spotify, on Apple Podcasts.

12:05When you do so, you help the show grow. When the show grows, we continue to create incredible business lessons for you right here on the podcast. Thank you in advance for doing that. It means a ton for us. Before I go, I want to leave you with this. When you are starting out, that P &L sheet, that spreadsheet that shows all the expenses and all your income, it has to be front and center. It's got to be a tab that's open on your browser all the time. You got to look at it every day and make sure you're getting closer and closer to profitability and staying profitable and then widening your profitability margin so that you're profitable by 20 % one month.

12:42Next month, you're 30%. You're 50%. The following month, 60, 70. You get the point. Those numbers are so important. So you got to watch them like a hawk in the beginning. So you give yourself the best chance of success. Thanks so much for listening. And I'll check you in the next episode. I'll see you then. Take care.

13:07We'll be right back.