Tips for Startups to Save Cleverly
Running a startup is not only about making revenues but also about managing costs by being efficient and productive. Especially if you are bootstrapping with minimal financial sources, or if you are experiencing a decline in your business, you want to keep the costs as low as possible. In this article, you can read about several tips to save costs cleverly as a startup.
Find smart alternatives to full-time employment
Bootstrap, hire only the best and outsource the rest
Hiring employees is probably the most costly thing for a startup. But how will you grow otherwise? You pretty much have to do everything by yourself at the first place. It is possible to learn many things by practice; product, marketing, legal, finance…Try to do everything as much as you can and outsource or hire when you think you’re stuck or you’re losing too much time. Don’t waste too much time on something that will cost you less when you outsource it because the time that you lose has a financial value as well. You may write your own user agreement, nevertheless, make sure a legal advisor reviews it. You may set up your own Adwords account, and try to learn how to set-up campaigns with the help of Google’s extensive support function. It will cost you to make some mistakes at the first place but it may still save you a lot compared to hiring a marketing manager or advisor at the first place. For more complicated stuff, like retargeting campaigns or maybe affiliate marketing, then get an expert to help you fix that. You may know some level of coding, but make sure it doesn’t take too much time to get where you want to go or make sure it doesn’t lead you somewhere that you didn’t expect to be.
Hiring developers to build a digital product is way too expensive for a start-up, especially in US, and Western Europe. You can actually save most of your employment costs by outsourcing to freelancers or to development teams on online service marketplaces. If you need a small task done with no quality concerns, use freelancer platforms to get the cheapest price, but if you need a higher quality product, try selective marketplaces that work with handpicked developers. My company Proteams is one of them. The development fees of our members are actually quite competitive as we work with the best teams from Eastern Europe.
Work with bright interns who have entrepreneurship spirit
Everyone wants to work with the best, but it is too expensive and difficult to find talented and experienced people who would want to work full-time at a startup.
With the transformation of work together with social media and online tools, even interns can actually achieve amazing things with few experience, especially in marketing. Nowadays, it is much easier for startups to reach masses just by blogging or using social media. So why not find a couple of brilliant interns who have good ideas to contribute to your business, who can write blog posts, manage your social channels, and maybe support you with business development or even customer relations.
Erasmus program in Europe is the perfect source for that. There is a whole season of 4–5 months that many Erasmus students have to do their internships. Interns with entrepreneurship spirit, of course, prefer to work with startups. They also prefer working abroad to experience different cultures and work environments. So I advise entrepreneurs to sign up to Erasmus Young Entrepreneurs and AISEC programs as a host entrepreneur or get in touch with the Erasmus representatives at popular universities in your city.
Erasmus students get support from the program, so most of them are actually willing to work without a salary just to gain experience at the right place. Some students might request wages, but the ones that have the entrepreneurship spirit knows that experience is much more valuable than a small cash to be earned from an internship.
You will really have to invest your time in finding the right guys and train them, and do it repetitively as one intern season ends another season begins, but it will be totally worth it if you find the right guys and effective ways to work with. Interns might really take some of the weight on your shoulders, but only if you can manage them well. With the right interns, you may achieve higher growth with increased blogging and communication activities with customers. They may also make you aware of the current state of your company during the discussions about your business, as they will be more honest with you than an employee. They can also be useful for gaining access to youth segment by using their university channels, and also by informing you about the new trends on social media.
Try working with local partners for growing into new regions
Instead of spending tons of cash on opening new offices in other cities or abroad, test the market with local representatives at first. Try meeting with people with a strong local network, either at an event or through social media like Linkedin or Twitter. You can even post a country manager or sales representative position on platforms like AngelList.
Such partnerships will maybe cost you a certain % of your sales, but you will not have to burn cash that you don’t have. That’s the most important thing, right? Besides, these partners might really add value to your business with their extensive knowledge about the local market.
Work with the best free online tools
Whatever business you are dealing with, you need the best online tools to communicate with your colleges and customers and also to run your business more efficiently. Online tools should help you with automating repetitive tasks in order to save time as well as cash. Some of the best online tools are all free with premium features and some other have just free trial versions that you start paying after a month. Take a look at another blog post in which our team has compiled the best productivity online tools online (Best Productivity Apps For Small Businesses) that are mostly free to use.
The most expensive online tools are usually the ones that you need for your marketing activities. Intercom is very popular lately with its flawless user welcoming experiences. After a long search, we found a really good and free alternative, at least for the live chat function, called Drift.
About user acquisitions, the best cost-saving alternative to advertising platforms, such as Google and Facebook, is blogging. With blogging, you can reach such a mass audience with no cost. Of course, it’s not that simple. Many startups hire freelance editors to write about interesting topics. The traffic that you achieve from these posts may be very misleading because freelance editors might not give enough thought into a certain topic. The blog post may generate a lot of traffic due to an interesting topic, but then all readers will churn pretty quickly when they notice there is not much in the post to read. Therefore, I believe that this is also a useless effort. You need to write very interesting and comprehensive posts that no one else has written about before. It’s quite challenging and time-consuming. Try to create a network of editors from people you know and trust that will generate quality content, and try to spread the work as much as you can.
Use video meetings as much as possible
About communications, try using video conferencing as much as possible. They are almost as intimate as a face to face meeting and they save you lots of time and cash. Everybody has a Skype account, even if it has some issues, it pretty much solves the main problem. For those who really hate Skype, or who want to invite more people in a video conversation, I adviseAppear.in. It is actually a really cool product that you can invite anyone that can join the conversation from a link without a sign-up. For very critical and official meetings, you can still have face to face communication.
Save on rent, definitely!
The best way to save on rent is to use coworking spaces with flexible seating and schedules. You can rent seats for some days of the week, or you can get more seats or even a private room as your startup grows. By signing up to a coworking space, you can not only save some cash but also be a part of a startup community. Some of your neighbors will probably be your first customers, and some your service provider.
For finding the best coworking spaces in your town, you better check coworkingintown.com.
Some entrepreneurs might not even have the cash to spend on coworking spaces, or might not like working in an office space and work anywhere as long as there is Wi-Fi connection and coffee. You can actually save a lot of money by working out of an office (at home, or at a coffee shop) as you probably spend a large amount of your time online. Besides saving from rent, you can also save time and travel expenses. And this work style might even increase the motivation and productivity at early stages of creative startups.
Another option might be to sign up to an incubator or apply for accelerators if you already have the motive. That’s a whole nother story, as applying to accelerators is much more than saving rent. First of all, not any startup can join. You have to be selected among many applicants. And if you are selected, you’ll have to attend a program to improve your business, with the help of mentors. For those who are curious about the differences between incubators and accelerators, here is a nice table explaining that.
Buy together or buy second-hand
It is easy to save on certain costs like rent and services, but what about your equipment purchases? You will need notebooks or PCs to work with, other technical equipment or furniture. But it may be really costly to get all these at once. Try to buy together with other startups to get a better discount, or try secondhand online stores such as Letgo. Secondhand driving is a serious budget cut option, as you can actually save about half of the price or more. But it is also critical that your purchase will take you a long way, so think wisely before you make a purchase. It may cost you more to work with an old PC at the end.
Although you don’t have much negotiation power as a startup, you can still save some of your costs by being a tough negotiator. You can not negotiate with Google or Facebook, but you definitely can with all small & medium sized vendors. Take a look at your major costs first and start with the services that matter the most (i.e. software development, hosting, office rent, accounting, or legal). Before you start negotiating with a provider, you should definitely take alternative offers from similar service providers.
You can use online marketplaces for gathering alternative offers for such services. My company Proteams is one of the marketplaces that provide software development services, actually the only one that is designed specifically for European startups and SMEs that look for high-quality talent at a nearshore. On Proteams, you can get free proposals from selected software development teams from East Europe, and hire one that you choose for your project.
There are several marketplaces that you can also compare fee quotes from consultants, accountants, and even delivery companies. So make use of these sites to be certain about the market prices for each service that you get.
All in all, stay focused and save cleverly;)