Effective Ways to Reduce Startup Costs
Studies found that 24% of startups fail due to the lack of money, while 13% of them struggle to get financing. The truth is that most startups do not have an angel investor to financially support them. Bootstrapping and taking out a small business loan may help you launch a business, but they are not enough to run your startup smoothly.
Precisely because of that, it is vital to keep your costs to a minimum. Here are a few tips on reducing startup expenses.
Switch to Remote Work
Due to social distancing measures, many companies needed to shut doors and shift to remote work. Now, many organizations are starting to see the benefits of hiring a distributed team. Some of them even decided to let employees work from home permanently.
Now, a remote work policy can help your startup reduce costs in many ways.
First, when working from the comfort of their homes, employees can better plan their workday and balance private and professional lives. Stats say that 77% of telecommuters report being more productive.
Second, remote work helps you save money on expenses associated with on-premise business operations, such as your office space, equipment, and travel reimbursement. A company can save $11,000 for each employee that works remotely half of their time.
Third, telecommuting improves employees’ morale, satisfaction, and loyalty. By boosting employee retention, you will also reduce the costs of targeting, hiring, onboarding, and training new staff members.
Reduce the Cost of Printing
Did you know that an average employee uses more than 10,000 sheets of paper every year? According to Gartner, businesses spend up to 3% of annual revenue on printing.
One of the easiest ways to reduce your startup’s costs is to go paperless. With the rise of cloud technologies, you can migrate almost any aspect of your business online, from document storage to digital invoicing, human resources, and inventory management.
To optimize your printing operations, consider investing in managed network solutions that will document workflow efficiencies for you and control the cost of printing. They have print tracking software that lets you monitor employees’ printing activities and view print documents.
Outsource Certain Aspects of your Job
As your business starts growing, the challenges will rise exponentially. Since expanding an in-house team is too expensive for most startups, you should consider outsourcing your business operations to outside vendors.
According to a survey conducted by Deloitte, 59% of businesses rely on outsourcing to minimize expenses. The same report found that 78% of companies are satisfied with their collaboration with third-party vendors.
Outsourcing helps you reduce costs in multiple ways, and including the following:
- It is done by professionals with vast experience in a certain field. As such, it offers greater flexibility.
- It helps you reduce the costs of employee training and recruitment.
- You do not need to make infrastructural changes and invest in new equipment as your in-house team grows.
- Outsourcing allows employees to shift their focus to other critical aspects of their jobs.
- You get quality services at a lower cost compared to hiring an in-house team.
- The growth of low-cost virtual services, like a virtual receptionist, for example, means you can get professional support for cheaper than ever.
Examine Monthly Expenses
For starters, identify the types of business costs, such as direct, indirect, fixed, variable, etc. Only that way will you have a clear idea of the money coming in and going out of your company and make wiser budgeting decisions.
Next, start examining your monthly expenses to reduce unnecessary costs. Once you take the time and do a thorough inventory of your expenses, you would be shocked to find out how much money is spent on inessential business areas.
For example, when purchasing business software, it is easy to get overwhelmed. Reduce your costs by investing only in the tools your employees will really use. You could also save a lot of money just by switching to a more affordable supplier.
Take Advantage of Bartering
Companies of all shapes and sizes use bartering to optimize business expenses. It involves an exchange of your startup’s services for the services you need. The process does not include any cash changing hand. Since the outbreak of Coronavirus that has destabilized the global economy, this trend has been experiencing a tremendous upswing.
According to some recent statistics, 65% of Fortune 500 companies engage in barter. Moreover, this practice has helped many cash-strapped companies survive the COVID-19 pandemic. Bartering reduces operational costs, boosts cash flow, and lets you gain a competitive advantage.
Invest in Digital Marketing
Instead of paying for traditional business advertising materials, such as billboards, newspaper ads, or flyers, start investing in digital marketing. It can help your startup’s finances in multiple ways:
- Digital marketing is highly personalized. Social media advertising provides advanced targeting options that let you display your content in front of the right audience groups. Email marketing tools allow you to segment newsletter recipients to provide more targeted feedback. That way, you will nurture your leads and boost sales faster.
- Digital advertising works on a pay per click (PPC) principle, meaning you only pay when a user clicks on your ad.
- Online marketing is simpler to track. With a wide range of digital analytic tools, you can monitor the performance of your marketing campaigns and stop wasting time and money on tactics that do not work.
Over to You
You can lower your startup’s costs without creating cheaper products or reducing staff. The tactics mentioned above offer more than that. They let you optimize your finances in the long run by making smarter, data-backed decisions.
About the Author:
Eve Anderson is a marketing specialist turned blogger. Interested in sports and exciting travel destinations. Love to share content that can inform people.
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