Are you losing money in your startup?
Experts say 8 out of 10 startups fail within the first 18 months, simply because they run out of cash. The key here is to determine the point at which your startup can run both effectively and efficiently. So, you need to know how to trim your startup expenses as early as possible.
Here is our guide for keeping your startup costs under control:
People
Hire people who have an appetite for high risk and committed to keeping costs down. Risk takers are willing to try out their luck in your startup because they see the upside of getting future equity.Hire people who will treat your money as if it were coming out of their own pockets. Try to reinforce this culture among your employees and make them think twice before they purchase anything.
Avoid signing up contracts with your employees that require capital which you may not have. The best way to avoid signing up contracts is to work with interns/freelancers, who are willing to work for college credit and accept a low salary.
Nearly, half of job applicants hide the truth on their resumes, so do a little bit of research on your best candidates. Hiring the right person can be the difference between success and failure of your startup.
Equipment and office space
Whenever possible, try to buy your office supplies in bulks. To prevent random spending, try to make a list of all the key functions of your startup, and buy the equipment you need to perform each task efficiently. Keep track of all the things you buy each month. If you dont, all the little things will eventually add up and make your startup lose money.
Try to avoid fixed costs by turning as many tools and services as you can into variable costs. If possible, try to find a mobile co-working space, instead of renting an office. If you really need an office, try to share it with other business/startups. This will give you the freedom to shift your business to a different location as it evolves.
Only add something to your budget, if it adds values to your customers.
Legal Expenses
Your startup might face a lot of unexpected legal bills at its inception point. To trim down the legal expenses, hire attorneys who offer flat rates, which will allow you to do a better budgeting. There are lots of DIY websites for legal documents, which are packed with basic templates for legal documents. So, before you hire a lawyer, do a bit of research and create a primary draft. It will reduce the fees you will have to pay to your lawyer. If you really need a more involved legal presence, which is often costly, then you can give away equity share in return for the legal advice you need. In the early days when Facebook was strapped for cash, they gave away equity to a lot of its legal service providers.
If youre lucky and have a lawyer friend, then seek out their help.
Marketing
A lot of early stage startups spend a fortune in marketing campaigns. But, often a great product is not enough to penetrate the market andmore importantlymarketing alone wont make an early-stage product gain mass audience.
The most important thing about startup marketing isgetting the feedback out of your customers. Leverage your customers and make them feel like valuable members of your brand.
Use word-of-mouth approaches to advertise your product. Attend startup/business/trade events to talk about your product.
Take advantage of free media coverage. Call out to publications important to your industry and let them know you exist. Write one or two short press release(s) and get them out to key newspapers and magazines.
Using social media is a great way to promote your startup, but make sure you post regularly and there should be a uniformed identity of your posts. According to a report by Buffer App: you should post 5-10 times/per week on Facebook, tweet 5 times/per day on Twitter, and post at least 1 time/per day on LinkedIn and Google+. [But, these numbers may vary across different cultures or nations.]
Use Facebooks Pay-to-play platform, Twitters sponsored option, or LinkedIns premium services to boost your posts. Invest considerable amount of time and money for creating high-quality content. Use your social media profile to reach out to LinkedIn groups or industry forums, and contribute to popular social media sites which your consumers might visit.
At the end of the day, it all comes down to the basics and having the right attitude. Its all about being resourceful and creative, and finding the right skill set to run your startup. Try to think small and learn from your mistakes. And remember, the less you do, the better you will be at doing it.
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