Money-saving strategies startups can borrow from giant companies
By Peter Theuri | June 3rd 2020
Among the struggle small businesses, including startups face, are maintaining and expanding their financial positions.
The following are some useful tips that could help startups manage their finances and keep their expenditures at considerably low levels. Some of these methods have been employed by big businesses to good effect.
While employees are crucial for the running of businesses and execution of ideas, the cost of maintaining them, including insurance costs and costs of office space occupied, could cripple operations of startups. As such, full-time staff should be maintained at a minimum with the not-so-urgent tasks outsourced to independent contractors on piece rate.
In addition to this being cost-saving, independent contractors and consultants are able to bring a lot of experience and varied opinions that could be useful to running the business.
2. Use of telecommuting
This is one of the main ways of cutting on business overheads. And although not all businesses will afford to telecommute, where possible, this practice helps save a lot of money, space and time. Telecommuting has been brought to the fore by the emergence of the covid-19, which has forced businesses to have the employees operate from home in the spirit of reducing congestion at workplaces while maintaining productivity.
And as the world goes into the new normal, startups will have to adapt to telecommuting, with the virtual ways of operation reducing overhead costs and in the process increasing efficiency in production.
3. Looking for smart, inexperienced employees
Due to most companies hiring on the basis of experience, a lot of qualified people are left out simply because they have not been in the work environment long enough. But experience does not necessarily guarantee the highest quality. Oftentimes, experience only means higher costs of procuring a service. Hiring fresh minds, such as graduates straight out of campus, might end up being the master stroke as their wage demands are not very high and yet can offer high quality with fresh ideas, youthful energy and raw determination. Such employees offer a monetary advantage in that they are paid an entry level salary, but are suave, tech savvy and eager to learn. They offer real value for money.
4. Using open source software
Big businesses often cut on the expenditures and opt for open source software. A lot of times they deliver quality using it. They do not need to buy expensive office software and service when they can switch to a cloud vendor at a fraction of the cost.
5. Going green
The more energy-efficient one’s office space is, the lower the utility costs one is going to have.
In trying to minimise on the costs, startups should slash on their lighting bill in many ways, including in buying LED bulbs. Keeping equipment on a power strip or turning it off when not in use reduces wastage and costs of operation.
6. Cutting down on meetings
This saves time and indirectly, money. The time spent in the boardroom by employees for any kind of negotiation might amount to a lot of losses accrued based on the average hourly salary that the employees are supposed to take. A simple calculation of how many hours are spent in meetings per week or month can reveal exactly how much is lost in a business due to the meetings. Freeing up of the time can get a lot of work done.
It is advised that in the case of an arising matter that requires a meeting convened, a business leader should send the questions to the employees in advance so that they can minimise time that is wasted in the boardroom in discussion.
Travel and hosting costs can make even on-site meetings expensive. Client meetings should be kept at the lowest headcount possible. Cost associated with meetings should be reduced to the minimum possible.
7. Joining a trade association
Trade associations help businesses in terms of market research and could help startups with crucial information that they can use to make decisions on how to better their operations. This saves the startups costs that could be committed to industry research.
The associations also lobby for the best interests of member businesses. This means that they can help establish the best deals for the startups. They help businesses get deals for bulk discounts or even lower insurance rates.
8. Going paperless
Elimination of use of paper in the office saves on a lot of cost and saves and a lot of time. Using technological gadgets eliminates time spent on printing, scanning or filing of forms.
As many offices aim to go paperless, the trend should be appealing to startups as one of the main avenues to save on money. This should, in turn, mean that a lot of investment is made on technological devices of passing information that will permanently replace paper, such as tabs.
9. Going for shorter leases
Starting small, startups should not be over-ambitious as to invest in spaces that will decimate their savings. Short-term leases offer flexibility that allows businesses to expand once the cash flow can support it.
But before the startup might require the kind of space that they aspire to have in the future, it is better to keep on using, on a short lease, offices that are grade B, which do not attract very high rents. This helps the businesses save on rents.
10. Buying used equipment
Instead of going for flashy, new, shiny equipment, startups can opt to go for slightly used goods such as printers, copiers, laptops, vehicles, storage equipment, packaging equipment and furniture.
This will help save on costs, preserving money that could have been used to buy a new equipment for the business. Second-hand goods could be as good as first-hand, only coming in at considerably cheaper prices.
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