As a startup business it is very easy to consider very mundane and unnecessary things because of the excitement and over-zealousness that comes with starting your own business.
After 6 months or maximum of a year, you start to ask yourself questions like:
“Where did all the money go?” Well, you actually spent it all on overhead costs which were not very necessary.
Startup business usually find it hard to plan their costs and income before starting out the business.
This post we would look at over head costs we cannot avoid, those we can cut and the others we can find a way around. Let’s remember that these decisions are on a case by case basis, because it worked for a tailor does not mean it would work for a property consultant.
We would use two different business owners for this exercise; Bola the makeup artist and Tope the interior designer.
- Bola (Make Up Artist): Bola has listed the following costs for her business:
- Beauty Studio
- Makeup variety
- Three staff
- Models for photoshoot
- Flyers / Brochures
According to her list, the total is over2,500,000 which is extremely high considering that the industry has low entry costs.
First things first, she definitely doesn’t need a studio in the very beginning, staff are unnecessary if any at all then one, website might also be unnecessary. Once she makes the necessary cuts, her estimate can go as low as One million naira.
2. Tope (Interior Designer):
- Staff (One)
- Office location
In Tope’s case, the list is actually reasonable because people need to see what they do so they will need to take pictures and put them on the website for others to see.
Because of of the type of job, an office location and staff are required for clients to be attended to when Tope is away on site / projects.
So in conclusion, when you are starting a business weigh the pros and cons before spending money on certain things.
Some questions you need to ask yourself are:
- Is a physical office mandatory for my startup right now?
- Do I need a website or will social media do the job?
- Do I need a full time staff or will a contractor be alright for my startup? etc.
How have you been able to cut startup overhead costs as an entrepreneur?
Share with us.