How to slash startup costs using technology and online services

Earlier in the year, short-term loan provider Borro commissioned a study to look into the costs of starting a business. Its research concluded that the average business startup cost was an eye-watering £94,000.

As a freelance writer whose startup costs were £300 for a laptop and £100 for a sofa, I took umbrage at the study’s findings - surely most businesses these days are started on a shoestring? Of course, such surveys should always be taken with a pinch of salt, as they are constructed for marketing purposes (Borro offers loans at right around £94,000 - what a coincidence!), nevertheless the results got me thinking.

Technical bits

Gone are the days of costly Microsoft Exchange servers and Office licenses. These days, you can get your email, calendar and productivity software, as a service, in the cloud from Google via its Apps package. Apps includes GMail, Google Calendar, and Google Drive, which has many of the features of Office plus some swanky collaborative extras. Best of all, the entire Apps package is free for up to ten users.

Using Google Apps will decrease your short-term outlay, but it will also save you money in the long-term. All your emails and documents are automatically backed up in disaster-proof Google data centres, and the software updates happen seamlessly at Google’s end - meaning you won’t have to stump up for a new version in a couple of years.

One cost that is more difficult to eliminate is hardware. Even if all your services are online, you still need a computer with a browser to access them. To offset your immediate setup costs, you can lease equipment from any number of enterprise IT providers (Dell and HP in particular are prolific business IT vendors).

Google also made a splash in this area recently with its Chromebooks, which are available for a monthly fee to businesses. Google estimates a company using Chromebooks would save over £1,000 per user per year compared to an ordinary Windows setup.

B2B Services

Dealing with solicitors and accountants is always a daunting prospect for business owners who have never done so before. There’s good news though, as once again the Internet can come to the rescue and offer flat-rate services for well below what you would pay on the high street.

Standard legal documents that would cost hundreds of pounds from a traditional solicitor can now be accessed for a few quid - or even for free - from sites like Docracy or Legal365.

Similarly, a range of online accounting software is now available to suit any budget. This includes standalone software for free or a low monthly cost, or full-service options (that include taking care of all your business filings with HMRC and Companies House) from around £60 per month.

Premises

Leasing premises can be the single biggest cost associated with starting a business. Not only must you pay for the property itself, but endless peripheral costs such as utility bills, insurance, cleaning, and furniture for your staff.

In the days of paper-based business, it was essential that staff were all in the same location so work could be passed between colleagues and stored securely. Now most business activities seem to take place online and new businesses should think carefully about whether they actually need a physical space. Working from home is becoming an increasingly acceptable and achievable practice, and many micro-businesses I’ve encountered now work entirely remotely, with the odd coffee shop catch-up to make sure everyone is in the loop.

If you decide your business is in need of some physical space of its own, there’s still no rush to enter into a costly lease. Co-working spaces have exploded in popularity in recent years, and allow freelancers, contractors and small businesses to rent desks by the month, week or even hour. This means you only have to pay for the space you need, and can expand and contract as your profits dictate. All the utilities, insurances and other extraneous costs are dealt with by the owner, so you only need pay for your desks.

More and more these days starting a business is what you make of it, and your startup costs needn’t be anywhere near £94,000. Take advantages of smart online services, flexible working and subscription payments and your finances will look much healthier in your crucial first year of trading.

Jon Norris is a freelance writer and Web Editor at online accountancy firm Crunch.