Death by expenditure has been the fate of what were otherwise promising startups. In the excitement of the moment, it can be tempting to buy in advance months or years’ worth of the supplies, equipment, software and inventory you’ll need. It’s often driven by many entrepreneurs’ penchant for over preparation when launching their first startup.
The founder seeks to make the perfect impression when the first customer comes along. The consequences of spending too much are disastrous for large established companies. For startups, it’s potentially catastrophic and there’s a risk the business may never recover. The following cost management tips are vital for a startup’s growth and survival.
1. Need-Driven Expenditure
There’s no shortage of things a business can buy. The latest equipment, software, furniture, and supplies are all alluring. While they all do have a practical use, they are expenses and that is something every startup would do well to avoid whenever possible.
Before you spend on anything, check to ensure that it’s something you really need and that none of the older items in your possession can serve the same purpose. Impulse buying has led many startups down the path to irreversible ruin.
2. Maximize Available Space
Whether you launch your startup from home or choose to rent an office, space is something you’ll soon be running out of as long as the business is growing. But space is expensive. Even if you are working from home, you’ll have to forego certain conveniences to create room for the business.
The natural thing to do when you are mearing your limits of workspace is to look for a new office. Most times though, there are creative ways you can reorganize your workspace and ensure efficiency that negates the need to spend more on rent. Rearrange furniture, see what items can fit under your desk, get rid of trash, or utilize tall bookcases and filing cabinets that maximize wall space.
3. Buy from Auctions and Garage Sales
If you are looking for office furniture and equipment at a bargain, auctions and garage sales are a great place to start. Still, you have to be tactful because not all such sales and auctions will stock the kind and quality of items you need. Give preference to high-income neighborhoods as the residents are more likely to sell almost new and barely used stuff.
Keep your ear to the ground for sales and auctions by people moving out of the city, state or country. Of course, some will only say this to bait buyers. Fortunately, it’s fairly easy to tell if someone is truthful once you have had an informal conversation with them. If they are dishonest, they will slip up at some point.
Remember to note down the time the sale begins so you are the first to arrive. The good stuff is always the first to go.
4. Make the Most of Technology
Startups, bootstrapped or otherwise, have a fairly tight payroll budget. You want to hire the lowest realistic number of people you need to get the business running. One thing that will help you do this is technology. Tasks that would otherwise be manually performed or monitored by an individual can be automated.
For example, as opposed to manually keeping track of employee leave days or clock in and clock out times, online scheduling software like Humanity are a convenient tool you can use to keep tabs of your team irrespective of where you or they are. You could also be open to telecommuting so you can have access to a less expensive talent pool that’s well beyond your office’s physical location.
Startups walk a tightrope and small financial decisions can have a profound impact on the business’ overall fortunes. By keeping a lid on your expenses while not starving the business of what it needs, you increase the likelihood of your startup succeeding.