Ask any founder of any startup – whether it’s a now wildly successful unicorn or a distant dismal failure – to name one of their biggest challenges in the very beginning, and chances are they will say cash flow.
A recent report from CB Insights breaks down the top 20 reasons why startups fail. Not surprising, “running out of cash” is one of the main factors. Most initial startup funding comes from the founder’s own personal financial investment and happens way before any seed money is received. In order to attract the attention of investors and venture capitalists, a viable product or solution that fits a defined market need must be well-developed and properly presented.
Smart money-management is crucial in the early stages of any business. Entrepreneurs must look for creative ways to save money wherever they can. This is why more and more new companies are implementing high-tech solutions in order to work smarter, spend less, and make every dollar count.
Here are 5 ways successful startups are using technology to reduce costs by 50% or more.
Cash-strapped startups and automation are a match made in tech heaven. Being able to automate any and all types of repetitive tasks not only saves time and money, it also gives a small staff the ability to focus on more important aspects of their jobs, like strategizing, business development, and fundraising.
Startups are now using automated solutions for all types of business processes, such as email and social media marketing, document signing and storage, HR and accounting services, and even competitive analysis. Some of these solutions even offer free versions, like Mailchimp for email marketing and Hootsuite for social media postings.
As a general rule in the early stages of any startup, whatever can be automated should be automated. It’s important to look at every aspect of day-to-day business activities in order to pinpoint tedious tasks or time-consuming efforts that can be replaced by automation.
2. Artificial Intelligence
Startups are using artificial intelligence solutions in order to gain a competitive edge and project a forward-thinking persona in their particular industries and domains.
One example of AI being applied in the startup world is the use of chatbot technology. From online website customer service chats to mobile application push notifications and text messaging, having the ability to respond to customers instantly is the new normal for all businesses.
Artificial intelligence is also being used to analyze big data in order to predict customer behavior and buying habits as well as forecast sales and market data more precisely.
3. Cloud Computing
Cloud computing is one of the easiest and most effective ways to save money as a startup. When using the cloud for all your computing needs, there is no need for expensive on-site servers, equipment, and additional office and storage space. Also, you never have to worry about paying for upgrades or maintenance charges, as they are covered as part of your monthly subscription package.
There are so many amazing cloud-based solutions that startups are using to handle practically every aspect of business, including recruiting, hiring, payroll, marketing, sales, accounting, and more. These cloud apps are the swiss-army knives of the tech world, as they can holistically manage a company’s entire business process and increase productivity. They also save a substantial amount of money when it comes to labor costs and additional employees.
Applications such as Salesforce, Microsoft Dynamics, and Google’s G-Suite are cost effective ways for startups to save money while building and growing their business. Combining powerful automation tools tailored to the needs of specific departments (i.e., sales cloud, marketing cloud, customer service cloud) with the convenience of instant and secure online access and customer support, cloud-based solutions provide affordable monthly subscription services that are a perfect match for new businesses.
4. Dedicated Development Teams
Staffing is by far the largest single expenditure for any business - from the time and money it takes to recruit and hire the right candidates to the added expense of providing costly benefits packages, office space and equipment.
Staff augmentation through the hiring of dedicated development teams has been a growing trend for quite some time in the startup community. By partnering with a reputable development agency, companies can hire highly-qualified talent with the exact technical skills required in a matter of minutes as opposed to months. And they don’t have to worry about healthcare insurance, paid-leave, or additional office space and computers.
One of the greatest advantages to working with an outside development team is that a startup can easily scale its team up or down as needed at any time.
Long gone are the days of large conference rooms where entire teams gather in person and even larger, expensive office space to house these conference rooms and teams. The way we communicate at work has changed, allowing us to be more productive without having to be tied to a desk in a certain location.
With remote-work arrangements and the ability to hire the best talent from all over the world, having the right telecommunications capabilities is critical to the success of a startup.
From regular voice calls to video chats, live presentations, and data sharing applications, telecommunication allows businesses to operate from anywhere and at any time, increasing productivity while reducing office expenses as well as payroll costs.
These are just a few of the many ways advancements in technology reduces costs for startups. As more cutting-edge solutions continue to be created each and every day – and are being created by startups able to develop these new technologies thanks to the cost-cutting applications mentioned in this article – this win-win synergy will grow and flourish and more startups will be able to not only survive but thrive.