“When money realizes that it is in good hands, it wants to stay and multiply in those hands.” ― Idowu Koyenikan
Small businesses and startups have been changing technology and the lives of people. They create opportunities for individuals to follow their passion, be their own bosses, and build an empire that can thrive in the future. However, with business comes expenses, and the most difficult thing startups deal with is saving money and lowering their expenses.
Starting with a constrained budget and limited access to capital, most startups who find investors go on a spending spree, hoping that their ideas will thrive. However, neglecting the cost-cutting programs they can incorporate, they are brought down in no time while their productivity yields a negative return.
In order to realize profit, generate revenues, and stay efficient, startups need to learn how to manage their expenses. Here we list the top 10 ways startups can reduce their expense in 2016.
1. Try cloudsourcing
Several studies have shown that startups that do their own hiring spend more than those who outsource their work. Reports say that it costs around $4,000 to find and hire a new employee, and the time and money spent on training, vacation, and insurance costs way more.
Many small businesses and startups who want to optimize their budget need to start cloudsouring their work to compete with others. The process involves hiring qualified professionals who work remotely and even at a cheaper salary compared to traditional employees. You can find people on platforms like Elance, Freelancer, and Upwork according to your need and you don’t even need to have them on a full-time payroll.
2. Lease what you need
Startups and small businesses often tend to spend more on office needs. However, leasing all the items that are necessary can save a lot of money. Items including factory equipment, computers, desks, and tables can be found on lease at several marketplaces.
3. Hire interns
You might not find a suitable cloud worker or you might require someone who is available when you need them right in front of you. In that case, you can call your local college or business trade school and see if there are students looking to work as interns. Many college students, despite having the qualifications, aren’t able to find an internship. This is where you can get your job done while also helping them to fulfill their school credits.
4. Go inexpensive, but not cheap
Many entrepreneurs and small business owners spend a lot of money on services like marketing, web design, and software development — and end up regretting it later. There are countless numbers of tools that are cost effective and handy for business owners looking to save their money.
Tools like Moto CMS help you create a great-looking website, and using BaseCamp and Trello to manage employees can help you cut down on your expenses by a lot.
“Free tools can be a bad idea — they’re free for a reason,” says Raad Mobrem, CEO and co-founder of Lettuce Apps. Try finding items that can get your job done and won’t cost you more in the long run.
5. Try new advertising
Advertising is a must for any kind of small business or startup today. From connecting with people to finding customers, advertising plays a big role in success. However, if you depend on traditional advertising forms, including print, television, or radio, the budget is surely going to rise.
To stay on budget and cut a lot of money, you need to take time and invest on digital media. You can start a blog and start promoting it through social media. Opening up a page on Facebook and Twitter is not going to cost you anything and this will cut your advertising expense completely.
6. Shop around for insurance
Startups need to minimize their insurance costs, especially during the renewal time, as this can eat up a lot of your budget. Start with finding and comparing insurance policies, and if you don’t have time, seek out an independent agent or a good lawyer who can help you with your insurance needs. They are not financially bound to any company and they can help you find great rates based on your needs.
7. Don’t buy in bulk
You read that right. What most businesses and startups do is buy office supplies in bulk, thinking that it’ll help them lower the cost. However, imagine buying a thousand markers — is that really necessary? With several online shopping and e-commerce sites on the web, startups can get confused about what exactly they need. Searchub, an innovative e-commerce platform that uses machine learning algorithms, offers users a truly personalized shopping experience.
Well, your cost per marker is surely going to be less when you buy it in bulk, but will you ever use a thousand markers? You’ll either lose them or they’ll dry out before you even start using them. Spend for the time being and avoid getting things you don’t require immediately.
8. Cut financial charges
Many small business and startup owners spend thousands of dollars on expenses that are not essential at all. For example, think of the cost that can come with late payments on loans, membership fees on business credit cards, and processing fees. You need to stay on top of your bills and pay them right when they are due. Seek online payment services if you find balancing your personal checkbook difficult.
9. Evaluate and re-evaluate
Take a pen and a paper and write down everything you require to build your startup. From office supplies to furniture, employees, internet, insurance plans, electricity, communication costs — everything. Evaluate your needs and look out for options. For example, you can save the money needed for paper if you use your computer to store your information. Also, choose free plans like Skype and Gmail to communicate. Rethink your needs and see if there are any ways you can cut your costs.
10. Don’t waste time
When you are in business and working with startups, you seriously need to understand the value of time. As an entrepreneur or a small business owner, you put in a lot of hours, and if you waste your time, it can cut your sales and hurt your business. The more you manage yourself, the more effectively your business will run. Stop procrastinating from day one and get on the right track to save a lot of your expenses.
Featured photo credit: stevepb via pixabay.com
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