With the proliferation of businesses leveraging digital technologies nowadays, a lot of budding entrepreneurs come up with their own business ideas to build a startup company. In fact, there’s an increase of pitching events where these entrepreneurs get the chance to sell their business ideas to venture capitalists and angel investors for the chance to win seed money capital in exchange of an equity share to the company.
True enough, every business needs working capital for its operations. This capital should be supplemented by more revenues and less expenses to sustain its operations. As a startup, entrepreneurs need to minimize their costs especially when their company is still in its early stages and huge revenue is not yet kicking in.
Here are some ways on how to minimize costs in case you plan to start your own startup company:
Offer equity to key people in management
As they say, ‘no man is an island’, you cannot build your own successful startup company without the help of key people in your management team. Instead of offering a big salary, for example to your CTO or Chief Technology Officer, try to convince and offer him/her a huge portion of equity instead.
Another option is to offer him/her a combination of a salary and a portion of the equity, depending on your budget. If that key person believes in your mission and vision, then chances are he/she will accept your offer. After all, big enterprises started as startup companies before, some are even in garages such as that of Amazon, Google, and Apple.
Rent a Shared Office Space
The shared economy is gaining more and more momentum nowadays as people look for lesser costs and more efficient services. Instead of renting a whole office space which would involve a huge upfront cost as you would normally need to advance one month of rent and two months deposit, you can minimize your rental costs by renting a shared office space. There are a lot of companies offering these services such as that of Devono Property Ltd., Regus, and others.
Reduce marketing expenses
Marketing expense is one of the big ticket operating cost that startup companies incur, especially if it is still in its early stages. Use social media platforms such as Instagram, Facebook and Twitter to promote your products and services. Engage with influencers to take advantage of their followers and convert it to become your customers.
Partner with comparison sites for your company to get included among the options in their site. Implement an affiliate marketing strategy so bloggers would write about your company in exchange for a commission for every product or services sold through them.
Make Deferred Payments
Whenever you buy goods and services from your vendors, try to convince them and make deferred payments. The usual time frame is 30 days after the delivery of goods and services but if you can convince them to lengthen it to 60 days, much better. It may be difficult for you to do it when you are just establishing credit with them but they may be willing to do so to get long-term business from you. If all else fails, check out a company review to see if they are a good fit for you or consider taking out a loan.
Starting a startup company means you need to hire some employees to manage your business operations effectively. However, hiring full time employees can cost you much since you are required by law to pay them some mandatory benefits.
Instead of hiring full time employees, offer internships to fresh college graduates who are seeking internships for job experience. Hire them and get your work done at low cost. Normally, allowances or stipends are paid to fresh college graduates when they work as internees.
Another way to save on manpower costs is to outsource that job to freelancers, especially if it is just a one-off job. There are a lot of freelance websites where you can hire freelancers who are willing to do the job for a small fee.
Take advantage of technology
Technologies nowadays makes us more efficient. Take advantage of free communication tools such as Viber, Whatsapp, Slack, Skype, Zoom, and others to communicate with your employees and customers. If your business is purely based online, you can in fact work from home to further save on costs.