Majority of startups today rely on their own savings to fund their initial operations. Unfortunately, more than half of startups fail within the first four years.
The most common problem that a lot of startups face is the fact that they spend so much money while the ROI takes a long time.
The good news is that there are strategies that startups can implement that can lessen their overhead costs.
1. Operate a business at home
First, why not start a business at home? Rent is a serious commitment that usually requires at least a 12-month contract.
If you can operate a business at home, you will be able to save a lot of money. A lot of startups are usually family-owned which makes this a perfect strategy.
Instead of spending money on rent, you can use your resources to improve your products and your services.
For startups, one of the best ways to save some cash is by doing some things yourself as a business owner.
A lot of business owners tend to also cover other roles within the organization. This can be a practical move especially if the operation is still starting.
3. Monitoring tools and supplies
A lot of businesses today lack the funds to hire people to get the work done.
What technology offers is the opportunity to decrease the number of people needed to get work done.
You can go for software and other free technologies out there that can help lessen the overhead in your daily operations.
Business automation is probably one of the best technologies that you can integrate into your startup. What it does is help lessen manual labor since a software does the job for you. It helps minimize the amount of time to get work done. And when it comes to running a business, time is money.
Also, a lot of businesses today still tend to use printers.
The reality is that printing costs a lot of money plus it can get quite messy.
You might even need another person to get things organized for you. What you can do instead is to go paperless if possible.
If you really need to print some documents every now and then, it is a good idea to take a closer look at print management solutions. These solutions can cut down the cost of printing which can still give startups significant savings in the long run.
4. Hire freelancers from other countries
Another great strategy is to minimize the number of employees that you are hiring.
Instead of hiring full-time employees, you can get the help of freelancers from other parts of the world.
The good thing about this is that you can pay them less. You can just pay per hour, or you can just pay per project.
Now, there are some freelancers that also have a more competitive rate because of where they live. Remember that the cost of living in an area can affect wage.
In some countries, $10 per hour can already go a long way.
5. Embrace cloud computing
Another strategy that can help minimize the cost of running a startup business is by embracing cloud computing technology.
What it does is prevent startups from buying hardware to accommodate files. According to the latest statistics, cloud-computing spending is expected to grow 6 times more than regular IT spending by 2020.
Not only does it stop you from buying hardware to expand your computer’s memory, it also improves access to files.
What it does is utilize working hours better as your team members can access the files instantaneously.
6. Monitor finances
The last thing that you want to do is to monitor your finances.
You want to figure out if there are some areas where you spent more than you should. Also, this can help you assess whether or not you are gaining profits or not. You have to also assess the effects of these strategies to figure out if it is really effective or not.
Having your very own startup can be challenging for an entrepreneur. However, you have to realize that you can still be successful as long as you know how to approach things in a smart manner. With these strategies, you can cut the cost of your daily operations.
For more business tips, check our entrepreneurship section and subscribe to our weekly newsletters.