Cutting the cost of your retail startup

Setting up a new business is not something to be taken lightly. It’s a big investment of your time and your money, and there’s always a lot of doubt and uncertainty over whether it will become a successful venture.

Money is something most new business owners worry about, especially if you’re a solopreneur or you’ve risked everything you have to get your business off the ground.

One way that new retailers can ease the financial burden is by cutting costs from the beginning.

If you can reduce your overheads and keep your operating costs low, you’ll be in a better position should growth take longer than expected. On the plus side, you’ll also stand to enjoy more of the profits if your base costs are at a minimum.

So how can you cut the cost of your retail startup? Here are some strategies to keep those expenses low.

1. Make savings on your general costs

There are some costs that all businesses have to pay, including energy costs, water bills, etc. Just as you would look for ways to save money on these at home, it makes sense to reduce your basic bills as much as possible too.

There are a lot of amazing cost-cutting ideas for small businesses that could drastically reduce your outgoings. Don’t be afraid to haggle with suppliers and do comparisons before you commit.

From insurance to vehicle hire, there are always ways you can save on these necessary expenses. 

2. Choose suppliers carefully

There are a lot of things to consider when it comes to choosing your suppliers.

A lot of people value trustworthiness and reputation over finding the cheapest cost. It’s a fine line to tread, which is why you need to spend a lot of time comparing different suppliers before you settle on one for your business. 

Getting help choosing business suppliers could benefit you if this is the first time you’ve done anything like this. If you can negotiate some favourable terms that will allow you a cooling-off period, for example, you can save yourself being tied to a supplier that ends up being weaker than expected.

3. Test the water with rolling contracts instead of upfront commitments

When you first launch a business, you have no idea how it’s going to go. You could enjoy overnight success and see huge interest in your business, or you could see things move at a much slower pace.

The uncertainty can be frightening, but if you keep your long-term financial commitments to a minimum, it will be easier to close down operations quickly if needed.

Look for options to pay monthly instead of annual contracts, at least at the beginning. There are pay monthly websites that can help you get your online store up and running, which can save you from being tied into a long and expensive contract.

As your business grows, and you can try more long-term planning, you can then negotiate lower costs for those long-term contracts.

4. Buy used and refurbished equipment

Business equipment is expensive. But no matter what type of retail business you’re starting, there are usually some good ways to find cheap equipment.

Even though the circumstances aren’t great for their previous owners, many businesses sell off their equipment when they fold - providing a good opportunity to grab a bargain on equipment.

Check out local sellers and auction houses, you’ll be surprised at what you can find!

5. Invest time and money in hiring good employees

Having talented people work for you provides enormous benefits. Staff who are good at their jobs helps make things more efficient, and means you’re getting more value from your recruitment efforts.

Placing ads, interviewing, and onboarding costs time and money, so you’ll want to ensure you hire the best employees. With employees who are a great fit for your company, you stand a better chance of them staying on, saving you some of the costs that high staff turnover can bring.

6. Choose low cost forms of advertising

Unless you budgeted for an extravagant marketing campaign, keep your advertising costs as low as possible.

From using social media to spreading word of mouth around your local community, you can still make an impact using low cost marketing ideas. As your business grows, you can then dedicate more of your budget towards advertising. 

7. Be savvy with your inventory

Being able to stay on top of your inventory can help you make key decisions about your stock and supplies.

In the first few months, in particular, you’ll want to know which products are proving popular and generate a good ROI, versus the ones that are under-performing. 

Many new online retailers are savvy with their inventory approach. They’ll generate a buzz around a product or collection launch, but begin with limited quantities, helping the product sell out quicker.

This not only reduces inventory costs, but also means items become coveted, making it an excellent marketing tool too. Pay attention to your figures to help you identify the trends that will help your business succeed.

8. Use tech to your advantage

There are a lot of different tech solutions that can save your business money. Firstly, pay attention to current retail technology trends - you can learn a lot from other retailers about how they use your tech.

Secondly, look at tech solutions that help you save time and money. There are some online applications, such as accountancy tools, which take a lot of the work out of running your business, but that will also save you money on hiring an accountant, for example.

Technology can automate, saving a lot of time and money that your business could use elsewhere.

Exploring automation in retail trends could help you identify tools that will benefit your own business, helping you get off on the right foot.

9. Be flexible with your space

If you have a physical presence for your retail business, you should look at more flexible or creative ways to operate than leasing a space that is too big or too expensive for your needs.

Many towns and cities are developing in new and exciting ways. From shipping containers to pop-ups, you could find a space that’s just what you’re looking for, without the high rental costs.

Some businesses that have closed with an outstanding lease may also be able to give you a deal to take it over for the remainder of the contract.

By shopping around for your space, you could end up with a bargain that will help keep your running costs low.

10. Take baby steps

As a new business owner, you’ll be brimming with ideas for things you want to do and products or services you want to introduce. However, doing too many things at once can lead to you losing focus, and cost a lot of money as you get things moving.

By taking baby steps and starting small, you can make much more informed decisions about your business and see where the water lies.

After you’ve started doing some things well, you can then focus on growth and expansion, knowing you’ve taken the time to make sure it’s the right way to go.

Starting a retail venture is a big commitment, but it’s also an exciting time. Having a plan for your finances and finding ways to reduce your costs will pay off in the long-term.

You can’t predict the future for your business, but at least you’ll be in control of your costs.