After the personal computer boom in the 1970s and 1980s followed by the Internet bubble that burst in the early 2000s, we are undoubtedly in the midst of another digital technology boom.
Instead of computers and the Internet, this time around the focus is on mobile apps, videos, and games that are revolutionizing our way of life – just think of how crowdsourced services like Uber and Airbnb alone have changed the meaning of travel!
If you are one of the eager entrepreneurs who want to participate in this exciting new era, you have undoubtedly faced one of the greatest challenges that every startup knows all too well: funding.
No matter how small or big your company is, there will never be enough money; but especially in the early stages of a new company, you have to find ways of save money, organize your budget, and use whatever funds are available wisely.
Let’s take a look at eight tips to save money for your startup.
All of us would love to have a full-time staff, but this is not realistic and a potential waste of money when you are just starting out. Instead, try to fill as many positions as possible with part-time contractors and only use their services when you really need them. Make sure, however, to comply with any labor laws the state you do business in might have in place, because there is a fine line between part- and full-time categorization.
Use templates wherever you can instead of hiring people to create things from scratch for you. This includes templates for websites, e-commerce stores, social media marketing, business plans, as well as legal and accounting.
3- Legal and Accounting
Speaking of legal and accounting… even though attorneys and accountants can be expensive, you should not shy away from hiring them early on. They will be your left and right arm making sure you stay out of trouble. Many startup lawyers and CPA’s are open to equity in exchange for no or lower fees – for a certain amount of time – as they understand that you are cash-strapped in the beginning. Treat them like potential investors; the more they believe in you and your idea, the more they will help you.
4- Outsource and Delegate
In the global environment of the 21st century, there is no reason why you shouldn’t go beyond national borders. This is especially true for positions like “virtual assistants,” who can help you stay organized so you can focus on essential matters, or tech and app developer companies in the Middle East, where talent is plenty and fees are lower. Outsourcing and delegating the work will help you grow your company while you focus on building your company strategy and reaching your overall goals using your core competencies.
5- Advisory Board
Establishing an advisory board is the perfect way to secure big industry talent, who believes in you and your team, but cannot commit to your company full-time. Also, you won’t even be close to being able to afford their salaries. Inviting someone to become an advisor to your company in exchange for a small amount of equity (usually between 0.5% – 2%) gives you access to their invaluable network of industry experts who can send you clients or other business without charging commission fees.
“Commission Only” can be two magical words for any start-up, because it ensures salespeople that they will be paid for their work – just not up front. In other words, for every deal they close for your company, they get commissions ranging anywhere from 5% to 30% depending on what you think is fair and fits your business model. Once your company has established revenue streams, you can transition to “base salary plus commission.”
7- A/B Test Marketing Strategies
Before spending your entire marketing budget on promotional experiments, make sure to A/B test campaigns, slogans, images, videos, and other marketing materials on a small scale to see what resonates with potential customers. Then, you can slowly start increasing the marketing spend on strategies that created the best results.
8- Strategic Partnerships
You are not the only start-up company out there; but you might offer a certain service or product that others need and don’t have. And chances are, they don’t have much money either. So seek out other start-ups and vendors who could be complimentary to your company, but instead of paying them in cash, offer them your services in exchange for theirs.
The overall goal for any start-up is to keep overhead costs as low as possible, because with any long-term commitments like salaries or office rent, you will run the risk of losing money that you need to grow your business.