Many small business owners can get lost on where to cut costs with their startup. They know they need current tech and equipment to compete with larger companies and get bogged down in indecision with what’s necessary versus what’s an investment versus what’s genuinely hurting your cashflow. Cost-cutting can significantly impact how the business is run and can also increase the total ROI. Below are a list of cost-cutting measures that will save money in the long-term for small tech companies.
It may be obvious, but going paperless is an excellent way of cutting costs. Ditching physical paperwork and opting to store data (contracts, invoices, documents, etc.) on the cloud is judicious. It’s not simply that printing eats up paper and ink (although those minimal costs do add up), but having all your forms easily accessible online saves you time. No waiting for your accountant to return, no digging around file cabinets, or revisiting the original intake order from the client — these minor minutes add up to wasted hours, days, and weeks. When you have all your paperwork digitized, you have immediate access to everything you need, saving time and money. It is imperative to transition to digital invoice, billing, and payroll systems to cut on recurring business expenses.
Marketing Your Business Online
Small business owners should ditch the traditional marketing strategies of having individuals go out to market their business. While “word-of-mouth” can be a huge driver of business, it’s difficult to quantify. Making an online presence however is as necessary as it is cost-effective. Not only do people expect a website for a business to look credible, but it is far less costly to create a blog and market your business from the comfort of your home. Social media is inescapable and is now an expectation for businesses as it offers customers an immediate lifeline to the product or service. Online marketing doesn’t require huge costs as the only initial requirement is an internet connection.
Start With Fewer Features
This is something many entrepreneurs learn first-hand from Eric Ries’ The Lean Startup method, wherein, when you try to develop a product that does everything, you wind up with something overcomplicated that most users won’t know to use. No where is this more true than in tech companies. Most tech startups want to develop myriad features to beat their competitors. However, the issue these entrepreneurs run into is added costs and time loss developing functionality that users do not find helpful or necessary.
Again, consider Eric Ries instant messenger app where countless hours were lost trying to get users to import their contacts from an existing messenger app when the reality was, users wanted to make “new connections” on the new app, not share or import their existing connections.
Start-up techs should consider having a product with fewer features. It helps to collect feedback from your target customers on the features they find helpful and the features they require you to add. Meanwhile, you can add 1, 5, and 10 year plans where you may want to add certain features, but put a pin in those for growth. Take your time to grow. As Bruce Lee once said (in paraphrased terms), “I fear not the app that has 100 features, but the app that has perfected one feature 100 times over.”
Hire Fewer People
Again, this is one of those areas that may seem obvious, but when you’re in the thick of your startup, it’s something that can be lost. Hiring and recruiting employees can be costly. Though you are setting up a business with a prosperous mind, uncertainty always looms on the business horizon. It is judicious to hire the only people you need at the specified moment, such as a product manager and CTO. For other positions that you may require employees, consider outsourcing or freelancers to do accounting tasks, content writing, and web designs. While having myriad in-house employees may seem like a good idea, it’s a lot of moving parts and, in the unstable startup world, could put your company at risk if that person leaves the company. For instance, outsourcing your tech support and web design is a great way to ensure longevity since they the outsourced agency must continually earn your business.
Similarly, some tech companies go the opposite approach and hire myriad, less costly employees, but when you expand rapidly, it can lead to things being dropped, forgotten, and a general since of “too big, too fast.” Hire essential people, treat them well and outsource where you can.
Renting out office space at the start of your business is not a great idea (especially considering the current circumstances), but especially since you can operate within the confines of your house. Most tech companies are growing big while working remotely and using collaboration tools (Skype, Zoom, Google Hangouts, etc.). Going remote saves on the money that would be spent on renting out some space. Going remote also helps you to move from metropolitans to cheaper rural towns. Last, it also enables you to broaden your search; you aren’t limited to people within your geographic radius, but can literally hire the top talent (often for less money) halfway across the country.