If there’s one thing every entrepreneur will agree on, it’s that running a small business is a constant battle with your wallet.
There’s always more to do than there’s money to do it, and that constant financial struggle can affect the growth of your business. In fact, research shows that about 29% of businesses that shut down did so because they simply ran out of cash.
But the good news is that you don’t have to be a part of that statistic. A lean budget doesn’t have to mean a dying business, because with the right approach, you can actually keep your business thriving even when money is tight.
How, you ask? Read on to find out.
Leverage Technology First
Here’s a good rule of thumb for small businesses with limited funds: before you hire a person, hire a tool. First, check to see if certain tasks can be handled by software instead of immediately hiring an employee. This would save you the cost of wages, benefits, training, equipment, and even office space.
For example, let’s say you’re launching a new business and need a website. Instead of hiring a team of coders and designers, consider using an AI website builder. You’ll save money, save time, and avoid the usual hassle of working with multiple creatives.
And here’s the best part: according to Hocoos, your website will look and work flawlessly on desktops, tablets, and phones. No need for separate editing.
A word of advice, though. Once you find a software that can handle your business tasks, if possible, start with a trial or a pro version. Don’t jump into the enterprise version immediately. You can always upgrade later.
See also: How Businesses Can Search the WhatsApp Web for Customer Queries
Start Small, Then Scale
It can be tempting to want to subscribe to the notion of “go big or go home”, but small businesses don’t have that luxury.
When you’re running a lean business, the smart take is to only buy or produce what you can use or sell immediately. Apart from the fact that starting small like this will mean less capital commitment, this approach allows you to learn and scale without risks.
And it’s not just about what you buy, sell, or produce. How you actually start matters, too. Do you really need to quit your day job to start your business? Probably not. About 51% of employees in the U.S started a part-time business or side hustle in 2024, according to recent data from MarketWatch.
By adopting this approach, you can build your business without the specter of financial pressure, and only step away from your job once the business is strong enough to stand on its own.
Cut Costs, Not Corners
Saving money is essential, but not at the expense of your product quality or business reputation.
If it looks like you’re going to be spending more money than you have or budgeted, look for areas where you can make sacrifices without affecting your overall customer experience. For example, you can negotiate with suppliers for fairer rates, shop around for software, and use second-hand equipment where possible.
Even better, go through your company’s bank statements to see if there are services you’re paying for that you don’t use or can do without. You really don’t need three subscriptions for the same service when one can serve.
Outsource Instead of Overstaffing
Every business dreams of having a full-time in-house team. While not a bad thing, you should know that retaining in-house staff is a huge commitment. You’re looking at costs associated with hiring employees, such as recruitment, onboarding and training, salary and benefits, office and equipment, and lots more. For many small businesses, these many expenses can be a huge strain.
This is where outsourcing comes in. Instead of biting more than you can chew, why not consider handing out non-core tasks to freelancers while you focus on the sensitive ones?
The advantage of outsourcing goes beyond just trimming expenses. McKinsey notes that balancing what can be done internally with roles that can be outsourced can create an impact of up to 10%. This can be the difference between just staying afloat and thriving.
Build Strong Customer Relationships
Do you know that it actually costs five times more to acquire new customers than to retain the ones you have? Basically, what this means is that if you’re looking at running a lean business, then your focus should be more on customer retention than constantly chasing new ones.
So, how can you optimize your customer retention efforts? It all comes down to building stronger relationships: engaging with them on social media, using AI-powered CRMs to deliver personalized recommendations, or offering discounts, promos, and little freebies that make them feel valued.
Just focus on making your current customers happy, and they’ll tell others about your business. That’s free word-of-mouth advertisement at its finest.
Wrapping Up: Do More with Less
You don’t need a massive operation or a big budget to run a successful business. You can do so with a lean budget and still be a competitive force in your niche.
To quickly recap:
- Use AI and automation to do the heavy lifting.
- Scale only when your business is ready.
- Make sacrifices without affecting quality.
- Outsource non-core tasks.
- Build lasting relationships with your customers.
Embrace these simple rules and you’ll not just be saving money, you’re also building a business that’s resilient and ready for whatever the market throws at it.
