By Mashum Mollah
From the outset, startup companies have the odds stacked against them. Their starting resources are limited, their ideas are often yet untested, and they face competition from numerous other companies, including other startups. It comes as little surprise then that every other startup has only about 50% chance of making it past the two-year mark.
Those that do make it, still have a long road ahead of them. Fortunes change often in the marketplace, and it takes a dedicated effort to stay on top of the game. The transition from a promising startup to a mature company is a process fraught with uncertainty, and a slow one to boot.
Fortunately, there are steps that every startup can take to increase their likelihood of making it past the dreaded 2-year mark. Cost-saving measures are one example of how a startup can consolidate its position on the market. Efficient use of resources will allow startups to save money for when they really need it, such as during economic downturns.
Since some startup owners and managers might still be unfamiliar with the best ways of saving money, we have decided to bring you the following guide. It provides an overview of some of the most basic cost-saving measures that any startup can effectively implement.
Concoct A Solid Business Plan :
Saving on costs can begin in the planning phase of a business, before the initial foray into the marketplace. In fact, the money-saving potential of a good business plan can easily surpass other cost-reduction strategies, which are usually implemented only once things start to go wrong.
At a bare minimum, a business plan should include an executive summary, a detailed elaboration of the product or service the company is going to sell, a description of the target audience is, an outline of the revenue model, a marketing strategy proposal, and finally a financial overview of the entire operation.
Once you put everything on paper, it becomes much easier to figure out where cost-saving measures can be implemented, and how they will impact the rest of the business. The plan should be revised on a yearly basis, according to what has been achieved in the meantime.
Hire The Right People For The Job :
If there is one thing a startup can count on, it is the enthusiasm of its founding members, their will to make it in the world of business. And when intrinsic motivation is combined with the possession of proper skills, success is all but guaranteed. Hiring the right people also has the potential to keep the overall costs of running a business down.
There are three basic types of candidates that startups ought to consider when hiring. The ones with experience, the ones with potential, and the ones with talent. Experienced workers are guaranteed to do good work, but they usually require higher-than-average compensation, which is something frugal startups want to avoid. Workers with potential can be a great asset down the line, but they require a lot of investment in the form of training, which again incurs extra costs. This leaves talented workers as the prime candidates for saving on costs.
For starters, these individuals are rarely in it for the money. What motivates them is a chance to prove themselves to their peers by solving difficult problems. As long as their thirst for a challenge is satiated, talented workers will be willing to work for less pay and benefits, which is a great boon for startups who have to keep everything on a tight budget.
Be Frugal With Equipment And Supplies :
Companies that are just starting out often make the mistake of spending too many resources on assets they don’t really need to conduct business. Office furniture, supplies, and equipment are the usual culprits here. It is tempting to go overboard and buy top of the line office furnishings thinking they will guarantee success. However, doing the opposite might actually be better for startups in the long run.
The three things to consider when buying office equipment are core features, long-term reliability, and widespread usage. Core features should be prioritized over extra ones because while they might make work easier, they often incur extra costs. Long-term reliability is more important than having a cutting-edge tech because the latter is more expensive. Finally, buying items that see wide usage in a given industry will keep maintenance and repair costs down, as there will be plenty of business competing to provide the best possible offer in the service sector.
To illustrate our point, let’s take the example of a manufacturing startup. Buying high-tech storage space to house materials and equipment for added security might be tempting, but installing high-security fencing around your office will accomplish the job at a much lower cost.
Leverage Alternative Forms Of Marketing :
In order to succeed in the modern marketplace, startups need to invest in some form of marketing. The trouble is, there are so many marketing strategies to choose from, that it becomes hard to pick one that’s best for your particular line of business. And choosing the wrong marketing approach can have a significant impact on a startup’s bottom line.
Before deciding on a strategy, it is imperative to conduct a basic survey of the marketplace, as well as to determine who your target audience is. Based on this information, you can then formulate a strategy that is tailor-made for converting your desired subset of the populace. This strategy can then be further fine-tuned by picking the right marketing techniques, hopefully implementing those with the greatest possible ROI.
Among these techniques, there are several which stand out in terms of ease of implementation and cost-effectiveness. One of them is search engine optimization or SEO. By fine-tuning the content of your website, you stand a better chance of attracting more organic traffic, and it can be done at basically no extra cost. Social media marketing is another frugal approach to promotion. Here, you are relying on your existing customer base to spread brand-awareness through word of mouth, again at very little extra cost.
We have outlined just a few examples of how startups can keep their expenditures down. There are many others as well, and figuring them out just takes a little bit of effort and creativity. No matter which measures you choose to implement, the effects are sure to become more noticeable down the line, as the company develops. Small cuts on costs can easily develop into large surpluses after a while, giving startups a much-needed boost to their presence in the marketplace.
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