How to Make Your Lean Startup Work With Almost No Money
Every year, new startup entrepreneurs attempt to launch a business on the leanest budget possible. It could be because they have limited access to funding, because they’re trying to maximize profitability, or another reason entirely. Whatever the case, you’ll need to make some big sacrifices and strategic managerial decisions if you want this lean startup budget to work — and it’s definitely possible.
How to Run a Lean Startup
Here are a few tips on how to launch your lean startup with a small budget:
Operate Your Lean Startup Remotely
Whatever your growth strategy is, you can make it much more likely to succeed if you reduce your operating expenses. One of the best ways to reduce your operating expenses is to reduce or eliminate office costs.
If you take your lean startup remote, forgoing a physical office space entirely, you can cut multiple different costs simultaneously. There will no longer be a need for an office lease, utility expenses, cleaning fees, or office supplies for a whole office.
There are certainly some advantages to having a physical office space, such as enabling better collaboration and teamwork within your departments and creating a more coherent sense of cultural unity within your organization. However, you’ll need to carefully consider whether these advantages are worth the financial price on your lean startup.
If you’re not ready to go fully remote, that’s okay. You can use some of the following strategies to reduce your operating expenses in other ways.
Consider a hybrid workplace.
Instead of going fully remote, you might adopt a hybrid model. In this approach, some of your employees will continue working from home, while others will work from the office. This allows you to attempt to get the “best of both worlds.”
Choose the right location.
Be discerning when choosing a physical office location. Sometimes, choosing a different city or a different part of the city could end up slashing your costs significantly. Business owners are sometimes willing to pay a premium for a hot location, but if all you need is a generic office, you’ll have far more options if you look outside of prime areas.
Pick something small.
Err on the side of a small space. As the square footage of your office grows, so do your expenses. Ask yourself if you need all the extra space. Embrace minimalism and choose a shorter lease in case you need to move to a bigger location in the near future.
Upgrade what you can.
If you want your office to be functional and comfortable, you can make some inexpensive upgrades. For example, you can upgrade the office bathroom on a budget by adding a bidet, redesigning the room, and adding nicer features (like odor control). You can upgrade the break room with a nicer table, better cooking equipment, and something recreational for employees to enjoy, like a dartboard. Even these small investments can make a big difference.
Negotiate the lease.
Don’t be afraid to negotiate the lease. You may be able to bring your rent costs down just by asking.
Hire Only the Best Employee Fits
Another major expense your lean startup will have to carefully manage is labor. Paying your staff can be excruciating in the early years of a business, so use the following strategies to keep costs low without sabotaging workforce quality.
Choose talent over experience.
It’s tempting to hire people based on experience, since experiences correlate with both knowledge and better performance. But experience also comes with a cost. Instead, consider hiring based on talent. There are plenty of young people with ample talent and minimal experience who are worth hiring, and they’re not going to cost your organization much.
Focus on versatile picks.
In the early days of your lean startup, your hires should be versatile. You might be hiring a person for marketing or HR, but would this person be willing to dabble in the responsibilities of another position? Or another department? Obviously, you don’t want to overwork your staff, but your business can operate much leaner if your people are flexible in the responsibilities they take on.
If you want your employees to operate with a lean mentality, you have to lead with a lean mentality. Essentially, this means making decisions and acting in a way that you want your employees to model. If you want them to be discerning and choosy when selecting a new acquisition for the company, demonstrate that behavior yourself. If you want your employees to be willing to put in extra hours when necessary, make sure you’re putting in extra hours as well.
Be Wary of Technology Upgrades
Your lean startup needs technology to run (and grow), but new technology can also be an expense trap for inexperienced startup entrepreneurs.
Here are some ways you can mitigate that:
Employ technological minimalism.
Technological minimalism means acquiring and using only the technologies that are essential for your business. Overbuying or investing in technologies that complicate your business, rather than streamlining it, can be devastating for your budget.
Choose your acquisitions carefully.
It’s tempting to buy a new tool because of its innovative features or its sheer novelty, but you have to fight back against this temptation and think critically. Choose your acquisitions carefully and add them one at a time.
Invest in now.
Every startup needs long-term thinking, but when it comes to technology, you should focus on investing in what you can use today, with an emphasis on scalability. If you spend three years building the critical technology your business needs in the future, you’ll probably run out of money before you even get a chance to use it.
One simple strategy to employ is to buy used technology whenever it makes sense to do so. There’s no reason everyone on your team needs the latest model when previous generations still work perfectly fine.
Automate Everything You Can for Your Lean Startup
Next, try to automate everything you can. Automation technology ranges from free to somewhat expensive, so this isn’t always going to be possible. But for the most part, investing in automation means greatly reducing your expenses. You don’t have to pay someone to do the work you’re automating. And on top of that, true automation is so predictable and repetitive that you can usually count on higher productivity as well.
Use Organic Marketing
Your business isn’t going to grow reliably unless you employ some kind of marketing or advertising strategy. The problem is, marketing and advertising can be expensive.
That’s why it’s important to lean on organic marketing strategies whenever possible. Strategies like search engine optimization (SEO), content marketing, and social media marketing are free to start, enabling you to reach small but relevant audiences. They are also highly scalable, allowing you to reach millions of people if you’re diligent and a little lucky.
Finally, keep in mind that your lean startup isn’t going to be successful if it remains stagnant for too long. Expenses that were too steep in the early days of your business may begin to look more reasonable. The strategies that allowed your lean startup to grow in the first few months may no longer be relevant. Be sure to take periodic assessments of your business’s spending, budgeting, and overall management so you can keep making adjustments.
Running a business on a lean budget isn’t easy, but if you can manage to do it while keeping the core ideas of your business intact, you’ll set yourself up for long-term success. After even a few months of operation, you could be in a better financial position — and potentially, one that could allow you to reevaluate your lean philosophy altogether.
Featured Image: Startup Stock Photos; Pexels.com.
How to Make Your Lean Startup Work With Almost No Money was originally published on Readwrite on January 23, 2023 by Deanna Ritchie.