Remember the kiddy bank where you used to drop all the coins given by your elders? We develop the habit of saving from such an early age. Personally or professionally, we as a human beings have a tendency to save our money. We save money for many reasons such as for the future requirements of family needs. Similarly, when we think of a startup business, we must concentrate on savings. We can call it reducing the cost rather than saving money. Due to the unorganized structure of startup environment, we spend money without even thinking about its importance. In this article, we will focus on few tips to save money while running a startup business.
- Outsourcing: One of the best option to save money for any startup is to outsource some of its business from others. This will help in reducing the extra costs such as HR and any other costs which can be done away with.
- Co-working Spaces: Try to work from a place by sharing the space with others and avoid renting an office premise until you are at over 20 employees. These days, there are a lot of options available for startups. Co-working spaces are far better and there are no hidden costs such as rent for building, buying desks, security, coffee, and cleaning. Apart from this, you can also save the time that you spend in discussions with the landlord for office space and buying furniture for your office.
- Go for a cheap domain: Don’t try to show off at the begging by buying a costly domain for your business. Go for a cheap one first till you establish yourself. Times have changed today. Just think before you spend a lot on these things.
- Part-time Employees: Always hire part-time employees for your startup until you grow big. It is a cheap and better option for a startup business and saves you a lot of money that can be utilized in optimum manner.
- No PR agency: Don’t increase your expenses by hiring a PR firm for your startup business. If you need press, then figure out who the top five journalists are in your city and send them a personal email mentioning the details about your startup and its product. The CEO-to-targeted-journalist approach works really well.
- Good bargaining skills: Especially, while hiring talent for the startups, one needs to be very well in bargaining. You can hire candidates at rate X, but tell them that you can only pay them 80% of X for the first six months or until you raise your first round of funding. Candidates will definitely make their choice whether to take this offer or not. Keep one thing in your mind always that you cannot hire an executive from a big company for your startup.
- Advance payments from clients: Try to convince your clients to pay you one year in advance for your work. Most of them will say yes. This will help you lessen the burden of interest payments of your startup on the loans availed from banks and other financial institutions.
- Other expenses: Confine your usual meetings to coffees, do not opt for drinks, dinners, or lunches unless they are clients who have spent money on you. Also avoid spending on activities that take a lot of time and cost 20-30 percent more for the startups.
- Opt for Drip campaigns: Drip campaigns are automated sets of emails that go out based on specific timelines or user actions. They enable you to stay in touch with groups of people based on events like when a user signs up for an account or how often that user visits your site. Each time a drip email is sent out, it comes from a queue of already-written emails and there is no need to manually write and send each one. They can even be personalized with your contacts’ name, company info, and more. This will help in reducing the marketing expenditure through other campaigns.
Though I have mentioned few ways to reduce the cost involved in a startup business, this is not the only means to do that. One can find many more measures based on his/ her own experience while running the startup.