“Frugality includes all the other virtues”. –Cicero
New entrepreneurs who found startups can quickly and easily find themselves strapped for cash. While SMEs and startups have been a source of new technological innovation, with opportunities for people to create their own jobs, follow their passion and build tomorrow’s fortune 500 companies, they are still businesses, and to do business, you must pay the cost of doing business. It’s popular knowledge that the largest obstacle startups face is funding and when funds are low, businesses must learn to operate at lower costs or fold. Cost-cutting methods are the best bet for startups if they are to survive.
As long as they are looking to make a profit, generate revenue and be efficient, managing expenses is something startup founders must learn. Outlined here are 7 ways startups can cut their spending and survive dry patches.
- Use interns:
As opposed to employing full-time staff, using interns has the benefits of being cheaper and helping students get experience. Just visit the universities in your area and find students who would like to work as interns. Most university students, despite being adequately qualified, have a hard time finding internships. Internship hires are symbiotic, in that both parties benefit in different ways – you from their qualifications at a lower price and them from the work experience and connections that would come in handy in the future.
- Don’t buy what you can lease:
Office furnishing is one area where startups tend to spend a lot on. Buying equipment is not advised if that piece of office equipment can be leased. Startups can save a lot of money from leasing office equipment for the time being. When they are more properly grounded and can easily afford these equipments, then they can be purchased.
- Track all your expenses:
Though it might sound obvious to some people, spending is very easy to ignore and when left unattended, bills pile up fast. Keeping meticulous records not only helps in the event of any legal issues, but will make life much easier when time for taxes arrives. Advances in technology have made it easier to integrate systems. Online inventory management can work hand in hand with bookkeeping software and lets you keep a handle on expenses, payroll and other costs.
- Outsource developers:
Hiring professionals on contract rather than employing an in-house development team can save money in some ways. The team members won’t use up floor space in an expensive office somewhere and they’ll be working remotely, just like the company’s founding team should be. Freelancers also tend to be cheaper than full-time staff. They don’t require insurance or benefits, and they don’t receive payment during downtime on a project.
- Don’t make bulk purchases:
Most businesses and startups buy office supplies in bulk, with the idea that it will help them lower the cost, but buying a thousand pens is hardly practical and even unnecessary. With several online shopping and e-commerce sites on the web, startup owners can get confused about what exactly they need, but while your cost is surely going to be less when you buy in bulk, you will never use a thousand pens, period. You’ll either lose them or they’ll dry out before you even start using them. Spend for the time being and avoid getting things you don’t require immediately.
- Try different advertising:
Advertising is a must for any kind of small business or startup and plays big role in business success, helping you connect with people and find customers. However, if you depend on traditional advertising forms, including print, television, or radio, the budget is surely going to rise. To stay on budget and cut a lot of money, you need to take time and invest in digital media. You can start a blog and promote it through social media. Opening up a page on Facebook and Twitter costs nothing and will definitely cut your advertising expense completely.
- Have detailed plans:
Take a pen and a paper and write down everything you require to build your startup. From office supplies to furniture, employees, internet, electricity, communication costs — everything. Evaluate your needs and look out for options. For example, you can save the money needed for paper if you use your computer to store your information. Also, use free media like Skype and Gmail to communicate. Rethink your needs and see if there are any ways you can cut your costs.