5 Business Expenses You Can Reduce by Hiring a Virtual Assistant
One of the first things you find out when learning how to start a small business is the massive cost it takes to run one. While the answer varies on the type of establishment (whether you are starting an online business or opening a local facility) and it’s corresponding needs, it pays to have a reasonable estimation to go with your business plans. This is how you create cash flow projections to help you control your finances while managing your business at the same time. After all, the last thing you want to happen when you’re still learning the ropes of business is scrambling to make ends meet.
So, where do you start and how do you come up with a reasonable estimate?
What are Startup Costs and How Do You Manage Them?
Startup costs are the expenses you incur to launch and market a business. It can be broken down further into two categories:
- Assets. The cash you have on hand or in the bank before starting the business is an example of a startup asset. Apart from this, other types of assets are the vehicles, equipment, real estate or furniture used for operations. Assets are mainly composed of things that you can use for longer periods.
- Expenses. These are the incidentals that you pay for to get a company up and running. Startup expenses can either be one-time deals or recurring charges. These include legal and accounting fees, rent, payroll, insurance, advertising costs, and travel budgets.
Categorizing your startup costs is one thing; managing them is an entirely different matter. When you get down to the nitty-gritty of running a business, you will find that your list would inevitably expand.
Even if you draw up cash flow projections, unforeseen business or customer needs would eventually pop up. Perhaps, you would need better packaging to protect product quality. Maybe you need an extra pair of hands to meet the demands of customers.
When you come into such situations, you can either increase your funding or manage your expenses. The trouble with the former is that it’s not always a feasible solution. Despite the many available options, startup financing also has its limits. Besides, investors are more interested in learning how they can grow their own money instead of shelling out more.
This leaves you with the most practical route: managing your spending. The best way to learn how to reduce operating expenses in business is to tackle the matter one business function at a time.
Working with a Virtual Assistant: Why It’s a Must for Startups
This is where virtual assistance comes in the picture.
Remember: you are in a critical period where you are working to grow your brand without increasing your spending too much in the process. Expanding a business and keeping its operating costs low sound mutually exclusive – hiring a virtual assistant (VA) creates a link that makes the two workable.
These are the 5 business expenses you can reduce when you hire and work with a virtual assistant:
According to Fundera, payroll takes up 25-50% of a company budget. While this only serves to give you a ballpark of the actual costs, you must also consider that to attract and keep employees, you must offer them an attractive salary package.
Hiring an assistant also racks up other types of expenses such as those associated to the legwork, onboarding, and training of a new employee. Apart from the financial aspect of employing an assistant, you must also consider the time and effort you invest in the hiring and recruitment process.
When you hire a virtual assistant, however, you are relieved from some of the usual financial and logistical responsibilities of employment. Of course, to reap the benefits, how you recruit a VA is key. It’s important to partner with a credible virtual staffing company so that the VA is contracted and paid by the said company instead of yours.
Working with staffing companies also gives you security as far as employee turnover is concerned. Unlike direct hiring where employers offer comprehensive salary packages to attract and keep the best talents, staffing companies usually refer to client-VA compatibility as the basis for creating business partnerships.
Marketing is one of the major allocations considered when making out a budget. It’s also a significant area to look at when making a cost reduction action plan. On average, startups spend up to 10% of its funds on advertising. If you choose to work with a third-party ad agency, you must be prepared to increase your budget.
Luckily, with the number of tools and resources available for entrepreneurs today, you have the option to build your own digital marketing team.
Just as there are multiple areas of marketing, there are also different marketing positions that your company needs to fill. Working with a virtual staff makes this a possible feat without breaking the bank. You can hire a content writer VA to produce the content needed for your digital platforms and a graphic designer to create the visuals that go with it. You can work with an SEO specialist and social media VA to get a high website ranking in Google and a strong social media presence.
The amount of money you save on ad agency charges can instead be streamlined to other costs such as paid search and social media campaigns. Another advantage of having your own marketing team is that you don’t have to start over every time you work on a promotion. Unlike working with a third-party ad company, your team knows your story from the get-go.
For startup companies, getting insured isn’t mandated by law. However, it’s a must if you want to protect your company and personal investments. For instance, a sole proprietorship is a business entity wherein the owner’s personal and commercial assets are combined. Therefore, any liability a sole proprietor incurs in business also puts their personal assets on the line.
A study by the Insurance Information Institute has revealed that 40% of small companies hit by a disaster do not recover and 25% cease operations after a year. With such high stakes involved, insurance becomes a necessity for survival.
These are the most common types of insurance entrepreneurs get to protect their company:
Different types of coverage come with different costs. On average though, entrepreneurs pay $700-$1,000 annually to protect their business. As you grow your company and add more people to your team, the price of your insurance policy increases correspondingly. However, you can regulate your business risks and manage the coverage cost if you work with a virtual assistant.
Not only are you relieved from paying the health insurance of your associates, but you can also disregard getting Employment Practices Liability, Key Person Insurance, and Workers’ Compensation Insurance.
Up to 70% of a company’s sales come from repeat buyers, a report from CRM Trends revealed. In addition, campaigns set for existing customers are more affordable and effective than the ones targeted to prospective buyers. So, as a startup, focusing on customer retention programs should be a huge part of your cost reduction strategies.
The best way to cultivate loyalty among your buyers is to have exceptional customer support.
Remember that people are more drawn towards a brand that appreciates their patronage and tries to build a more personable relationship. From a business owner’s standpoint, this means offering open lines of communication through phone, email, or chat support. This means having brand representatives who acknowledge customer pain points and offer empathy as well as solutions. Apart from repeat purchase discounts, sending thank you or happy birthday emails and members-only perks build brand loyalty that no amount of flashy promotions can beat.
This is the kind of support you can offer buyers when you work with a VA to answer your communication platforms as promptly and as satisfactorily as possible. VAs specializing in customer service and retention can also help you come up with more creative and effective programs to keep your clients happy.
Equipment, office spaces (leased or owned), furniture, supplies, utilities – these are the essentials for the day-to-day operations of any company. Some come with a one-time cost, while others have recurring monthly charges. All in all, these essentials can rack up thousands of dollars. As your campaigns gain traction, you can cater to more customers and add more people to your team. This entails expanding your office space, adding more furniture, equipment, and supplies, and paying for higher utility bills.
Otherwise, you can embrace technology and open yourself and your staff to telecommuting. Through virtual assistance, you and your staff can make money from home and save a significant amount in the process. As self-employed workers, VAs have their own equipment and can pay for their own utilities and supplies to fulfill their tasks and excel in their industry.
Notwithstanding the reduced operational charges, you also do away with travel expenses. And because people who work from home usually have flexible hours and work in a more relaxed atmosphere, productivity and work satisfaction are also bound to increase among your team.
Expenses are inevitable in business but with careful planning and the right support, they can be managed without reducing brand credibility. Hire a VA and see how these top 5 business expenses decrease significantly.