#104 Saving Money When Setting up a Business
Today I’m going to talk about a topic I get asked about a lot, and that is saving money when it comes to setting up a business.
Whether you are in the early stages of setting up a business or you have been operating your business for a while, you need to have legal structures in place to protect your business.
It can be tempting to overlook this and direct your budget to graphic design, business coaching, copywriting, Google ads... However, skipping over your legal processes can put you at risk.
I share the importance of ensuring your legal documents are in place and the cost effective ways you can achieve this.
We know that cash flow is the cornerstone for every small business and that knowing and managing your money is powerful. It’s abundant, empowering and important. Money is not a dirty word.
It’s important to analyse and scrutinise where your money is going so that you can ensure you are investing where you need to. You can then set your business up for sustainable success.
In today’s episode, I encourage you to think long term and set things up right from the start. Prioritising the important things will save you time and money, and you won’t regret it.
I hope you find this insight enlightening and that it offers a new and empowering perspective for you and your business.
Full Transcript:
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[00:00:00] Hello everyone and welcome to episode 104 of the Rise Up In Business Podcast. Today I'm going to talk about a topic that I get asked about a lot, and that is saving money when it comes to setting up a business.
So I have clients predominantly that are one of two categories, either setting up a business or in the very early stages of setting up a business and they've got questions around legals and structure and strategy and all the things or clients who have been operating their business for quite a while and they've now come up for some air and they've got questions around legal documents and what's the most cost effective way to go forward and plug the holes or fill the gaps of things that they've missed earlier on in their business journey.
Either way is fine. This is a conversation that I enjoy having a lot and I like to talk to people about triaging the things that you need in your business to protect your business and to set your business up for long-term sustainable success. So when it comes to how do I save money when setting up a business, or even, how do I better manage my cash flow or my budget with all the things that I need when I'm setting up a business, I like to start first of all with preparation. So knowing your money is powerful in business. We know that cash flow is the cornerstone for every small business. We know that. So knowing your money and managing your money is powerful, it's abundant, it's empowering, it's all the things. So it's important. So money's not a dirty word.
You would've heard me say that on the podcast many times before. It is not a bad thing to be analysing and scrutinising where your money's going, so you can make sure that you are investing [00:02:00] where you need to, to set your business up for sustainable success. Budgets are real. I get it. We all have cash flow projections or financial flow plans, or whatever you want to call it.
Budgeting is real. Knowing where your money goes is real and it should be, and it's okay. That's the first thing I wanna say. Some people get very uncomfortable or find it very uncomfortable talking about money when it comes to business, but I don't think you should. Like I said, money is not a dirty word, and this is something that we should be talking about more so you know where your money's going, where it's coming from, and that you know what you're doing with your money is serving your business. So let's talk about step number one. When I answer the question, saving money when setting up a business, Tracey, where do I go? Where do I spend? What do I need? First thing I have to say on this is plan your business.
Plan what it is that you are doing or that you're planning to do in your business and if you've been operating for a while, take a moment to pause and reflect and plan the next chapter in your business. And that's gonna include things like your business structure, if your service-based business is gonna include your services, your offerings, your packages, your pricing, your models. If you're a product-based business, obviously that's going to be a little different and you're gonna be considering your products and your pricing and your cost per units and those types of things.
Plan what you're doing on your website and what are you using your website for. We all have websites, or almost all of us have websites. The reality is it is a form of validation and people do want to go to your website to make sure you're the real deal and check you out, do a little bit of online stalking to make sure that you are who you say you are, and to get a vibe and see whether they wanna engage with you.
Plan your social media, if you're gonna have a presence, if you're gonna run ads, you plan it. So you work out what you need and you work out the direction that you wanna take your business. Once we've gotten the parameters of that really clear, we need to focus on risk mitigation, [00:04:00] and if you've been listening to the podcast for a while, you would've heard me talk about the risk mitigation strategy for every small business.
And that's really simple. Your risk mitigation strategy for a small business is comprised of three things. Your business structure, your insurance, and your legal documents. You need to have these nailed. You need to be across it. You need to know it inside out so that you can be confident going forward.
If you miss this, that is when you are leaving your business potentially yourself exposed. So we need to hone in and focus on the risk mitigation strategy. This is powerful. We need to consider at this early planning stage or this semi early planning stage, if you've been operating for a while and you're taking a pause to consider, is your business structure working for you?
Are your insurances adequate and do you have the right legal documents in place that are doing the things they need to do? This all comes under the umbrella of planning. That's fun, that's exciting.
Sure, for some people it can be overwhelming. That's what people like me are here for, to help you and support you through that process. But then we get into the second tier of the answer to my question, and that is your cash flow projections and your budget, whatever phrase you like to use around your money.
This is the know your money stage. We often hear people talk about minimum viable product, I want to launch this business, I just wanna get started, I only have so much cash, I just want to give it a crack, get going and see what happens. There's a time and a place for that, and I don't by any means think that you should be stalled and not moving forward.
But I do think that being hasty and acting in haste, acting without preparation and acting without a plan can lead you down a path of challenges and pain and ultimately not much joy at the end of that road. When it comes to planning our cash flow and working out what to spend and where, we need to think about what you really need in your business, and we need to start right.
So what do you actually [00:06:00] need in place now to launch your business or to continue moving forward? You need to get this right. You need to start on solid footing here. You need to start here. You need to build from a position of strength. You need to set yourself up for success.
You want to manage your relationships with your clients so that you're setting both yourself up and your clients up for long-term, positive, sustainable relationships. This is why it's so important to look at your risk mitigation strategy. Your risk mitigation covers so many things.
It covers, sure, something going wrong and a claim being made against you, or proceedings being made against you, but it also covers, your risk mitigation strategy will also cover managing the expectations with your clients so that your clients are more likely to have a positive experience with you, because guess what?
They're gonna tell more people. Word of mouth, your reputation. All of the things.
This is why I come back to risk mitigation when I'm asked about costs and saving money when it comes to setting up your business or evolving your business into its next chapter. Legal compliance, legal documents, are vital in this process. Honestly, I have seen so many times people try to take shortcuts here and I can hand on heart say to you, it is not worth it.
It is not worth it. There are no shortcuts here. Your business is your time, your energy and your money, your business is worth proper legal documents tailored for you to manage your risk mitigation strategy and to move forward. So I often flip it here and say to clients, well, we explore all of the things and we triage in a list of what it is that you need.
And I'm talking things like a website designer, a graphic designer, a business coach, ads, a copywriter, all of those things. Your legals need to come at the top of that. And the reason is they are your foundations for your business. If you think about trying to build a house and you go to your builder and say, mate, take it easy on the foundations.
I [00:08:00] don't wanna spend too much there. Take a few shortcuts, she'll be right. I just wanna get in as quick as I can. That builder ought to sack you as a client. They don't want to be working with people like that because we all know how risky and dangerous that is, because it's shortsighted and there's no long-term gain there.
We all know that without proper foundations, your house is gonna cause you problems and you probably won't have one in 10 years to come. Same thing goes for your business, legals in your business. They are your foundations. So building those foundations is what we need to take time to do when we're talking about your risk mitigation strategy.
I like to think about it this way. What's the cost of not having these things? A very clever client said to me when she came to me for the very first time a couple of years ago, buy cheap, buy twice Tracey, that's why I'm here. I bought template legal documents, and now I'm here. I have to buy them again.
They don't serve me. They don't work. They fall short. They haven't helped me out of any pickle with clients. Buy cheap, buy twice. That's not in the spirit of saving money. So when it comes to budgeting and planning and saving money, look at what you need, triage it, put it in an order, and consider it through the other lens of what's the cost of not having it?
What's the cost of not having your legal documents in place? Unhappy clients, misaligned expectations. There's no malice here. There's no intention here. Everybody comes to the table with the best of intentions and wanting to do the right thing, but you just landed in a situation where there's misaligned expectations where the clients thought certain things were included when they're not.
Where the clients thought they had more rounds of revisions than they do, whether clients thought that they had different payment terms, whatever it might be, we wanna manage that earlier on. You can't afford not to. You can't afford not to have deposits or non-refundable deposits, or if you're running courses or programs, think about that money back guarantee to better manage refund requests.
The time and energy it takes in dealing with some of these things costs you money. It can be avoided,[00:10:00] so that is a saving. You can't afford not to think about these things before you launch. You can't afford to have a client become disgruntled, refuse to pay and go and make a claim to Fair Trading or the Small Claims Tribunal in your relevant jurisdiction.
Or go and tell four people that were thinking about working with you not to because of their bad experience, or worse, leaving a negative review on Google. We can mitigate this risk and we mitigate this risk with solid legal documents which serve you in your business, setting out for your clients what your terms are, or what your client services agreement is. Or when you are selling your programs and courses online, make sure you've got those click wrap terms and conditions in the right place, agreed to at the right time saying all the things they need to so that you are protected by the Australian consumer law. You are complying with your obligations and you're managing your client's expectations right from the outset.
It honestly saves so much time and money doing it right. So when I answer this question and I talk to people about budget, I'm thinking long term. This building a business, business, it's not for the fainthearted. If you run a business, you know it. So we've gotta think long term.
It's a slow burn. We're in it for the long haul. We wanna do it right, we wanna do it once. We wanna do it properly. That's why flipping the cost question around what's it gonna cost me not to have is just so smart. It makes so much sense, and it yields an understanding that you wouldn't otherwise get.
So when it comes to answering the question, how do I save money when I'm starting a business, sit down and plan. There's no substitution for proper planning. Sit down and plan what you wanna do, where you want your business to go, and from there, work back. What do I need? Triage the list. This is my budget. But what I do say to you in closing is this, if you've got budget for website copywriting, business coach ads, or whatever it might be, you ought to reevaluate and make sure your legal compliance and your foundations in [00:12:00] your business are at the top of that list.
If you don't have budget for that, you are not setting yourself up for success. And trust me, if something goes wrong and you come along to a lawyer like me asking for help to dig you out of a hole before you've really even started, that's equivalent to essentially 10 steps backwards, and it's gonna cost you a lot more than what it would've cost you to invest in your legal documents to start with. I hope that's been helpful and that you have found my insight on this to be interesting, hopefully enlightening or just even a different perspective that perhaps you hadn't thought of before.
If you've been cutting corners, if you've been putting this off, let this be your message to not do that any longer. It may be the case that you've been flying safe for a while, but let's not tempt it, is what I say.
Prioritise you, prioritise your business and think long term. You won't regret it. If you think that other people in business would benefit from listening to my insights on this, please feel free to share this episode.
That's how we get the podcast into the ears of more business owners to add value and educate and empower, which is what I'm here for. Catch you next time.
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