7 Things Startups Should Stop Spending Too Much Money On Right Now !
As it appeared on Techstory.in
The startup world is surrounded by predators. Ever since the advent of the startup movement various entities and business models emerged with a singular cause of praying on the ever growing number of startups where the entrepreneur becomes the product being sold.
As if simply growing company wasn’t difficult enough already.
If you are a startup the cash in your bank account is your holy grail. Be extremely vary where you spend it. The tips below will help you rationalize more wisely.
Startup events
I have said it before I will say it again. Most startup conferences are scam. I hope this word will probably ring a bell inside your head because it is a word most people tend to take seriously.
Most startup events are consuming time and money of the the founders. Unless you are a B2B startup selling to other startup and have already reached product market fit (means you know what exactly you are selling and to whom) you should reduce the time you spend on those glittering fantasies you are being sold and get back to work.
Lawyers
Many startups operate in regulated domains and this question may naturally pop up for them. Should I opt in for a lawyer?
The answer is still — No. It is okay to ask for legal assistance but do not go for the classical type of contracts that would usually serve justice to large corporations. You can go for far lesser than that.
What will suffice in most cases is to reach out to a friend or a family member who deals with legal matters and beg for a quick piece of advice. It is a dollar well saved.
Coworking spaces
Coworking spaces are extremely prevalent nowadays, especially in India and that worries me. Coworking spaces suck. Do you know why?
Because you mingle with all sorts of mediocre people and the mindset of the worst guy in the room usually becomes the standard behavior of the crowd. A heavy statement, I know.
When you opt in for a coworking space keep in mind that you will be mingling with people who only take a hot desk because it likely serves as an external validation to them, making them feel that they are busy and acting on something, an attempt to rationalize the conviction they seek so badly that they might not be that crazy or useless, after all they are going to an office like all normal people do every day, right?
Your startup needs to act like a cult. It should deliberately shun away influences and people that do not share the same level of fanaticism or values like you do. What is far better is to have your own working space where the team builds the next big thing and be ferocious about your values and culture. Don’t let it distill in a coworking place where various cultures and people mingle, where anyone stands for everything and no one stands for something.
Developers
Hiring developers people to work on your product is always a good idea.
But here is the thing about developers. The good ones are very expensive. And they only tend to work with those better than themselves or those whom they respect.
So unless you don’t have cofounder who is well reputed in the developer’s circles it may be better idea to first get one before start hiring other developers. Without one you will have to use cash as mean to attract them and that’s a very risky proposition. In the initial days you don’t want people to come working for you just because of the money.
Accounting and finance services
I can barely see a reason why an early stage startup would have accounting department or even worse a CFO. Ask what their job is and the answer will be — Nothing. Yet they are on your payroll in a time where every dollar is a precious thing and should be allocated wisely.
PR
The holy grail for so many startups out there and at the same time the reason for doom for many others. What startup founders should understand is that PR and media is not special set of people with special powers. Just treat them as another business development department.
A simple fact of life. If you are successful, media will automatically cover your story. And you become successful by delighting your users.
Advertising
Another grave source of expenditures which startups especially those at their early stage should be avoiding and running away from like crazy.
Why? Because in early stage companies, there is no advertising. There is only customer acquisition. The founders themselves are responsible or getting the first 500 customers. Do not approach creative agencies unless you are already at a stage where you are able to tell that X amount of dollars invested will bring you Y amount of revenues.
The problem with advertising agencies is that they come in the middle of the process. You as a founder can know the beginning but cannot know the end of the company or whether you will rebrand later or do customer or product pivot. Therefore the agency’s creative work will be short-lived and will not be a part of a broader context and a comprehensive story.
