How to save money as a startup
Startups will often start with very small budgets and have to watch the pennies carefully in order to grow successfully.
Whilst not every startup can get funding just like that, many will have to show their ability to offer value or generate revenue before they can attract any kind of investment.
In fact, a report by INC.com showed that 42% of failed startups struggled due to a lack of initial funding. And whilst funding is not available, startups need to find important ways to save.
This article will list some insightful ways in which startups can save money.
Make use of free available tools for as long as possible
It is a good idea to essentially make use of free or low cost tools for as long as possible, ultimately until it makes no sense to. For instance, using PayPal for payments, Wix or WordPress for website building, and a Google Drive for sharing can work to an extent with a small amount of employees or incomings.
This can help a startup to get off the ground, while not buying into any unnecessary subscription services that are simply not needed until later down the line.
Always bargain for a discount
This is particularly applicable in instances where you may be able to offer an exchange of services, which means no payment at all.
It is always worth asking, whether it is a digital subscription service or office space, if this is the best rate that they can offer.
Often, when buying certain products in bulk or via a subscription service for a certain number of employees, you will be able to bargain down the costs and consequently reduce spending and outgoings, saving money in the early days of the startup.
Make use of portfolio companies
This is applicable for startups that have already received some funding from traditional venture capital firms. Not only do you receive the funding, but this additionally opens up access to all of their portfolio companies.
In these instances, your startup may be able to benefit by signing up for the portfolio companies and connecting with them, ending up with great discounts as well as beneficial introductions to their employees, who may be able to assist with tasks or projects at a lower cost than finding an entirely external contractor with no prior relationship.
Keeping your funding options open
Whilst VC or angel investment is always the most sought after for startups, one has to assess whether this is best for their company and its personal needs.
Although seed, VC or angel investment can be effective for those with large growth projections, the role of more everyday funding can assist with cash flow. This includes the likes of cash advances, invoice factoring and converting personal loans into business loans.
This type of finance can assist with the everyday costs and overheads such as paying staff, bills, equipment and marketing costs, whilst allowing you to assess your options for bigger funding long-term.
There are also a number of government schemes and grants that you can consider, especially based on your region and the sector that you are working in.
Sharing an office
Since the Covid pandemic, many businesses have decided to scale back on office space and work in communal settings, where hot desks are available and you can book out meeting rooms on an hourly basis. Not only is the overall cost of doing so, in combination to home and remote working, far cheaper than office rent, but it can also be useful in terms of building relationships and connections with other startups or investors.
