The sooner you realise that “budget may limit your startup”, the better for your company’s progress. A lot of new ventures are initially funded by just friends or family, and sometimes even out of the entrepreneur’s own pocket, which means there is a cap on the amount of cash flowing in.
Image : shutterstock
Here are some ideas to cut the overhead costs in the early stages of business:
Share office space
A lot of startups work out of homes of friends and colleagues, but as they begin to make profits and expand the company, they feel the need for a bigger space to operate from. When you are at this stage, it may be easier to find an office space to share with another business. This way, you minimise the cost of a place that you may not be using fully every day. This is an excellent way to cut costs and also meet some new people!
Buy in bulk
A common mistake startups make is buying smaller quantities of everyday items so that not a lot of supplies go to waste. However, this would result in higher costs in the long run when it comes to even the smaller items such as pens, papers and office stationery. Though the office space may not permit too much storage, buying in bulk, or even doubling the quantity bought each time can reduce expenses.
More employees than necessary are involved in certain manual tasks that startups might do. Eliminate this by automating processes such as payroll, administration and accounting. In doing so, the advantages are three-fold – you save time, you save money, and you increase the accuracy of the work.
Hire as many freelance employees as you can in the place of full-time ones. Full-time employees cost much more: besides the full-time salary, you will have to pay for paid leaves, employee benefits, their equipment and supplies and others expenses. With freelance workers instead of permanent employees, you can save as much as 20 to 30 percent on each individual.
Plan your expenditure
In the early stages, costs such as insurance, utilities, salaries and others are overlooked as things that will figure themselves out. This lack of planning only makes acquiring the assets more expensive when you actually need them urgently, and costs tend to go out of hand. Plan at the beginning, and secure enough capital to keep your business running until you start to make profits.
Many startups make the mistake of assuming that hiring friends or family will be more cost-effective than hiring a stranger off the market. They fail to consider whether these members have the knowledge and skill. But it’s the people who eventually lead to the success of failure of your business. Hiring, firing and then re-hiring until you get the right talent is an expensive process. So be careful while hiring.
There is no way to conduct business without incurring overhead costs. However, a lot of these can be eliminated or minimised with some smart and efficient planning and leave you with more profit in the long run. A business that has streamlined its processes and operations has a much higher chance of succeeding than one that hasn’t. The less money that is wasted on administrative expenses, the more can be channelled towards improving the product that is offered by the startup to the market.
Want to make your startup journey smooth? YS Education brings a comprehensive Funding Course, where you also get a chance to pitch your business plan to top investors. Click here to know more.