When you’re starting a new company, there is so much to worry about, but the biggest thing you inevitably stress over is money. You might have a limited budget given to you by seed investors, or from money you’ve saved yourself. You know it can take time to become profitable, and so you want to spend your money smartly and wisely. But how do you do that?
Below are some of the most useful tips that can help startup companies save money in those critical early days.
1. Use a Coworking Space
Arguably the easiest way to save your money early on is not to rent a private, dedicated office space of your own. When you sign a full office lease, you not only have to pay rent and local rates, but also cover your telephone installation and fees, Internet installation and fees, not to mention heating, electricity and the rest. The alternative? Rent a startup coworking space.
Coworking spaces give you flexibility with low starting costs and typically prestigious CBD locations all at the same time. As you get more money coming in and you grow, you can add desks to your space, but you can also shrink your operation back down if things go the other way. What’s more, all the utilities and other services are provided on-site.
2. Work from Home
If the budget won’t even stretch to a coworking space, then start off instead by working at home. Gathering your team round at one person’s home, or in separate homes and meeting online, is a perfectly viable way to get things off the ground. The savings you make early on by doing this can be astronomical, and with lower overheads comes more scope for ploughing revenue back into the business to grow it.
3. Buy Second-Hand Equipment and Tools
Another big capital expense in the early days of your startup comes in the form of equipment and tools. This can include everything from everyday office equipment like computers, printers, scanners and whatnot, to more advanced equipment like manufacturing tools and machinery. Costs can really spiral here, especially if you insist on buying everything brand-new.
Give yourself some leeway on this by allowing some of the equipment to be bought second-hand. You can save a bundle if you first take on some good-quality but pre-owned tools and equipment. Second-hand does not mean dilapidated or useless, and don’t you forget that! Quality will last, so purchase pre-owned top-brand stuff at knock-down prizes for the best results.
4. Ask for Discounts from Vendors
When you’re a startup, one of the worst traits you can exhibit is pride. Some entrepreneurs try to focus on showing off; building themselves and their image to create an illusion of wealth and success. Perhaps that has some positive impact on marketing, but it’s no good for your bottom line in the short-term. Don’t be prideful – ask your vendors if they might cut you a little slack and offer some discounts since you’re a startup.
After all, it’s in their interest to see you grow. If they nurture your loyalty now with good deals, they’re more likely to win your ongoing business later on. What’s more, the worst they can do if you ask is (very politely) say no. You’ve nothing to lose!
5. Favour Tech Over People, At Least for Now
Finally, in the early days of your startup, you can try to cut costs by trying to use affordable tech-based solutions to certain problems rather than doing what some do, which is to hire more bodies to get more tasks done. There are many great software programs, POS systems, online retailing and web design infrastructure and more, all of which is at your disposal for probably less money than it would cost to hire someone extra.
Until you have the capital to really get into the people business, stick with tech solutions to save money, time, and energy.