Like many entrepreneurs, I have in the past made the mistake of racking up expenses before I was actually executing my business because I thought I needed those things in order to make my business work. It takes money to make money right? Well, that old saying is really only true in it's literal interpretation. It will cost you money to incorporate, host your website, ... but there are many areas where spending has become less necessary than in the past.

Communications:
Mobile phone plans are cheaper than ever and many include long distance, data and other services. Some will even give you access to wifi hotspots. I personally have not had a home phone since 1998, long before most people gave them up for only having cell phones. After the first six months of that year I realized I never used it and was spending $50-60 a month for nothing. Ditch it if you can, but if you really need a separate line, go with a VoIP service provider like Vonage.

Cable, Fiber or DSL? Whatever you chose, you'll need net access. If you can get fiber great but unless you are in a bandwidth intensive biz, you probably don't need it right now. Cable is better than DSL in my opinion but if you opt for DSL, don't let the phone company convince you that you have to have an active landline for it to work, you don't (I used to work in Telecom and know better and now you do too). You need wires there yes, but not landline service.

Technology:
Microsoft Office is a great suite of tools but it's not necessary. Open Office or just using Google Docs can be a great alternative and both are free. I haven't used Open Office in a while but the only down side to using Google Docs will become obvious if you do really heavy spreadsheets with lots of drop-down lists, pivot tables and other dynamic functionality. If you don't, and that is 99% of you, then Google or Open Office are a great way to save hundreds of dollars and not worry about loosing data if your computer crashes.

Need an extra computer, consider installing Ubuntu in stead of Windows. it's the most user friendly Linux version ever and if the majority of use for that computer happens through a web browser, all the better, it's fast, secure and free.

Here are a few other ideas for you:
1) Buy new technology or other assets when you need them, not in advance because you expect you'll need them later.

2) Be prepared to trade services with people when you can but expect that some will still simply want to be paid for their work and eventually you'll want the trade thing to all but go away. still, in the early stages it can save money and you might build a great partnership.

3) Shop around, for everything.

4) Don't go cheap on things you really need or that are core to you doing business. Spend where you need to, not where you don't.

Starting a business is fun but expenses can run away if you aren't careful and that first big bill will show up before the first revenue and strip the fun out if it very quickly. Starting a business isn't an excuse to go on a shopping spree just because you can write some or all of it off.

Labels: start up, technology