We always rush with an adrenalin pump, when we want to do something new. For example, when we plan to open a startup, we always ask questions — How successful will it be? What will happen if there is a loss? etc. It is always advisable during this initial stage to think and act intelligently. It is based on this decision; the future of a startup depends. So it is important to identify the best practises for your business.
It is often found that several new budding startups get misguided and tend to spend too much on many things, which many not at all be required, and thus can be avoided. A budding entrepreneur must always focus on the future and try to avoid unnecessary expenses at any cost.
In order to help young entpreneurs, better manage their expenses, we have identified few points, which can help them to cut down overhead costs significantly.
- A swanky office — In the present globalised world, we all love to work in an office environment, where we spend good amount of time, a cafeteria, gym, and library. But a startup founder must keep in mind that at an initial stage your focus should be on the business development and not on renting a swanky office, which might burn a hole in your pocket. You can definitely do that later when your startup starts to grow and revenue increases.
- Hiring talent — At the initial stage of your startup journey, try not to hire permanent resources, which might increase your expenses every month. The idea situation would be to outsource the work or hire temporary staff for a project, so that the fixed cost can be avoided.
- Spending too much on social media — In today’s age, it’s quite natural for startup founders to get influenced by social media and see number of fan, followers, likes, shares etc. on social media platforms such as Twitter, Facebook, and LinkedIn increasing day by day. However, this may not give a true picture of your growing business. This will definitely increase your customer engagement and visibility, but simply based on that analytics, spending too much on social media marketing is not recommended.
- Expensive subscription based services — There are many free software services readily available in the market. You can always try out these options, if it is worth your business, and can skip the costly subscription based services, which will increase your overhead.
- Exorbitant office equipment — Budding entrepreneurs always like to work with latest technologies, which have the potential to increase efficiency. But, make sure that the technologies you want to use in daily operations are really necessary at the initial stage of your startup. Also, check whether the cost incurred on buying those technologies is worth the investment and adding any value to your business and increasing productivity.
- Office parties and business trips — At the initial stage of your startup, you must see that the business should focus on only those trips that would be beneficial in the long run. Recreation and parties are essential for any organization to stay motivated and enjoy their work. As an entrepreneur you have to draw a line. If you spend excessively on office parties and trips by staying on luxurious hotels, flying on business class flights, throwing office parties at 5 Star hotels, you are definitely going to incur huge loss.
- Invest in those areas that are absolutely essential — As an entrepreneur, you must think twice before where to invest. Because every single penny counts for a startup. Hence if you don’t have enough funds to back up your loss, don’t invest on things that are not of high priority. Your investment strategy should be well thought out, so that your business sustain in the long run.
- Extravagant lifestyle — Though it is essential for an entrepreneur to wear business suits, attend meetings and seminars, but it is not advisable to wear expensive designer suit from Armani to show off. It’s a good feeling to be an entrepreneur, but in the initial days you can’t too much on your lifestyle.
- Glossy business cards — As a young entrepreneur, you might get tempted to flash glossy business cards and lavish office stationeries to crate impression. Yes that’s necessary to some extent, but you shouldn’t go overboard to do that. A startup can save a lot if they don’t spend unnecessarily on these costs.
- Unseen or non-quantified efforts — Don’t spend on those things which can’t be quantified. No doubt, PR and marketing may give mileage to your startup, but if the marketing and PR can be done in an innovative way, then a huge amount of money can be avoided. You don’t need to hire an established PR and marketing agency to take care of your branding activities. You can hire freelance marketing and PR consultant; they will not only do an excellent job, but also save you money.
A techie by profession and loves dogs. He is an avid reader and wants to travel the whole world. He is a guest writer with Startup Simba.
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Originally published at startupsimba.com on May 18, 2017.
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