— December 18, 2018
The truth is that most startups do not have an angel investor that funded millions of dollars for the company to get going and become profitable. Personal funds or small business loans are startup capital for a vast amount of companies in their infancy. For this reason it is imperative that costs are kept to a minimum as a lack of cash flow can impact quality of work, employee pay, and can lead to a backlog in orders for those creating physical or digital products. Taking the time to do an inventory of costs can be shocking as many startups do not realize the amount of money being spent in one area versus another. The following are tips to help drive costs down at a startup without impacting quality of work to keep customers happy.
Allow Employees To Work Remotely
Allowing employees to work from home can do various positive things for a startup. This can be a perk given to those that might deserve more compensation for the great job they are doing but the company cannot afford it. Most people are willing to take a pay cut for the freedom of being able to work from anywhere in the world. All the startup has to do is monitor production as allowing people to work from home should not come at the expense of profits. Saving money on office space can be a huge positive aspect of allowing employees to do this. Saving monthly on rent can add up over the course of the year especially in high cost cities like that of San Francisco or New York. Allowing remote employees can also attract top talent that do not want to go to an office daily thus increasing profits through the great work they will produce.
Outsourcing and Automation
Data mining and other tasks that are time consuming but take little knowledge or skill can be outsourced. There are plenty of areas for a startup to outsource starting with the accounting department. Hiring accountants can be expensive when for a reasonable fee you can outsource accounting. Do not underestimate how much money can be saved without impacting quality of work for clients as well. Marketing often times is outsourced to professionals rather than a startup staffing a marketing department in-house.
Automation is important as it can help save on labor costs whether it is populating a sales form instead of having to do data entry or optimizing other processes. Find out where employees feel like their skills are being wasted to see where automation could make a huge difference. In some cases, automation could help a company streamline costs by eliminating the need for certain positions.
Examine Monthly Costs To See Where Money Can Be Saved
Monthly costs like that of retaining legal counsel or even a certain internet provider need to be examined. A company could find that they could save thousands of dollars per year simply by switching to another provider or enlisting the help of another law firm. Things like hosting fees can be below $ 5/month for a cheap web host which is a great option for certain businesses. Business like ecommerce stores need to invest a bit more into hosting and their website as this is how they generate income. Reach out to certain companies that the startup does business with to see if discounts can be offered for being a loyal customer or signing a longer contract.
Internship To Hire Programs
Creating an internship program that hires superior interns can be a great way to save on hiring. Hiring a person simply due to a good interview does not guarantee that they will be a productive staff member. Internships can be used as a tryout of sorts as the company can see the work ethic, how detail oriented a person is, and whether they would be a good fit with company culture. Internship to hire programs can coveted by college students so this can also boost the quality of applicants for the intern position.
Attend Conferences To Sign Multiple Deals In A Weekend
Spending money to make money has to be done in some instances in the business world. Taking trips to see one or two prospects is not a good investment of money as failing to close a sale with either of them will result in an empty trip. Tradeshows and conferences help bring hundreds of prospects into one area with the intention of creating new business relationships. Finding a list of attendees can be a great way to plan a strategy of high priority prospects as well as current clients that need to be met with in order to maintain a healthy relationship. Even if a deal is not signed the leads that are garnered can be invaluable so it is essential to follow up with those that gave business cards out both by phone and email. At times all an individual has to do is clear a deal with their manager so the follow up could close a deal almost immediately.
Saving money does not always mean that a company is going to come out with a cheaper product/service that lacks is previous quality. Take the time to see where costs can be reduced and start making a plan how to start saving now!