Do you know that 77% of small businesses rely on personal savings for their initial funds? While Startups are usually financially strapped, the idea that you may run out of money can make your blood run cold. When the source of funding is usually from personal savings, relatives, friends or family members, it is vital to invest the money wisely and avoid expenses which have no role in elevating your business. The overhead costs sometimes amalgamate to huge sums and deprive you of money which you had earmarked for your indispensable investments. Reduce startup overheads by replacing it with economical and efficient substitutes, present in the market.
Listed below are some ways which can help you to reduce your overhead costs so that your precious money can be used judiciously:
To physically operate a business can cost you a huge amount of money. If a business can be administered from home or basement, why spend money on renting huge spaces in mid of the city. In fact, 69% of U.S. Entrepreneurs start their business at home. Instead of spending a huge sums on rent, improve your services and make your product better. When you feel the need to have a bigger place for operation, instead of renting a place all by yourself, you can share office space with other small entrepreneurs who are also in the same boat.
Don’t be frugal when investing in technology. Don’t let the size of the company hinder your vastness of thought. Your startup might be at an initial stage and small, but your ideas are bigger. Reflect your big ideas and ambition through a well-designed website and application. Going Online can provide you with a great market. Your clients are just a click away from you and all you need is a compelling online presence to fill this gap. Also, conducting meetings over Skype and hosting webinars will help you cut down your travel expenses. You can also hire a virtual assistant instead of a real one.
Cloud makes you look bigger than you really are. It provides you with infrastructure that is reliable and scalable. Instead of worrying about servers and digital infrastructure, you can directly focus on your business. You pay for the services you use and you can always increase or decrease the usage according to your requirement. Look for cloud solutions such as Google Docs, Google Apps, and Dropbox that allows file and data sharing. It can provide you with a location friendly work environment. Your workers can work on the same project from anywhere without being physically present.
The workings of websites is quite different from Mobile. To cater to a diverse audience and build your market presence you might need to go the extra mile for mobile users. However, this doesn’t mean you need to develop an app from scratch for your business. By cloning your website into a mobile app you can create a good enough UI for your prospects. Unless your business model is based on your app, it is apt to go with the mobile website than the mobile app. Native apps require a lot of nurturing for different platforms and this comes up as a big burden on finances. You can always opt for a native app when you are ready to scale up your business.
Permanently hiring employees can cost you a lot. Instead, reduce overheads in startup by hiring freelancers to cut payroll, and drastically bring down overheads. With the budget you have, you may be able to afford one or two employees on a permanent basis to start with, who handles limited areas. By hiring freelancers, who excel in the field they work in, you can address all the facets of your business. For example, Upwork can provide you with professional freelancers from various fields and you can pay them hourly or on completion of a task.
Minimum Viable Product is the initial product of the startup that is just good enough to validate your idea. A lot of expenses are incurred in team building and scaling a company, but what is the point if the market isn’t ready for your product or service.. Companies of every scale and size prefer to launch a dummy product before developing a full-fledged product for the market. By working on MVPs you can control and even eradicate many overheads in your startup. Another way is to smoke test your idea and pivot product market fit accordingly.
82% of startups fail because of inadequate cash flows. Hence, it becomes very important to prioritize your expenses and track it regularly. Even a small change in the way you spend money can save you considerable amount of money in the long run. Excessive burn rate can bring your startup to the ground. By using these means of reducing overheads in startups you can make sure that your lean startup begins in the right direction. The level of unpredictability cannot be addressed every time but you can definitely cut your startup overheads to make room for important investments.
We at NewGenApps understand the needs and challenges of Startups. Get in touch to know how we can help you to assert your authority in the market through our expertise in providing cutting edge solutions for your business.