Recently, we wrote about the Costs to Starting a Business and received great feedback on keeping costs as flexible as possible. What does flexible mean exactly? Well, who wants to sign up for a big mortgage and buy a bunch of furniture on credit card before having a steady job? Pretty sure no one emphatically answered yes. The same can be said for a new business. Before income is made, you don’t want to sink a bunch of money upfront. For new businesses, optionality is paramount and a dollar wisely not spent can be put to work elsewhere.

Who is this for?

  • Startups

  • Entrepreneurs

  • Side-Hustlers becoming Full-Time Hustlers

Keep reading if you’re…

  • Drowning in work and thinking of hiring someone

  • Looking to expand into a physical space

  • Rather invest in technology versus hiring

TLDR: Employees are costlier than the starting salary so pay the higher rate for those contractor, freelancer, or expert and use them as necessary. Be creative with your physical space needs and avoid working for the landlord as long as possible. And when it comes to scaling businesses processes, think digital first and consider an app based-solution making those first hires.

Ways to Keep Costs Down

Setting up a Workspace: While the prestige of a fixed address is appealing, consider the monthly and upfront costs and income needed to support such an expense. Beyond the rent, you’ll need funds upfront for the security deposit and legal fees to review the lease agreement. And don’t forget about the cost of furnishing the place. Instead, consider working from home, setting up in a commissary or co-working space. While these physical arrangements may not be for everyone, you’re not working for the landlord at least.

Using Cloud Apps: Not sure if anyone is still buying apps upfront, but most cloud-based apps are priced like Netflix and charged monthly now. Yes, the total cost of ownership is likely more than buying upfront. But hey, you get the latest features and can on focus on running the business instead of IT.

Making the First Hire: If you’re looking to hire someone for your business, consider all the extra costs beyond the salary. Along with salary you’ll be responsible for Canadian Pension Plan and Employment Insurance. Worksafe BC insurance may apply. You’ll need a payroll app and someone to process the payroll and remit government employment taxes. Consider entering into an independent contractor agreement with someone. Perhaps you can pay a higher hourly for someone part-time with flexible hours. Just make sure you’re above board when it comes to hiring a contractor versus an employee. Things can get murky quickly, but hey, incur the people cost only when you need it.

Use Outsourced Experts: At some point you’ll need expert advice and can’t afford to bring in someone on salary. While the rates are at a premium, just realize these folks are experts and do don’t need to pay them full-time. Smartly seek the best freelancers, contractors, and experts for a good price and get what you need and be okay with the premium.

Invest in Technology: As your business grows and you are looking at offloading your paper shuffling to to the first hire, consider the second option – using technology. Most business processes technologies can be digitized and automated. While not fully automated, at least the inefficient data entry can be minimized and passed back to a person for final review. Why pay someone $30 per hour when you pay the app $30 per month?