Are you at that point where you are looking for ways to reduce startup costs?
Even if you are bootstrapping, launching a startup business costs money. How can you reduce those startup costs?
There are really no businesses that you can truly start for free. At best you are still looking at several hundred to several thousand dollars to get off the ground and getting money in the door. It always costs more than you think, and the results will take longer than you hope.
However, the number one reason that companies of all sizes fail is running out of money. It happens to most startups. It happens to large international corporations that have been around for decades.
Many incredible entrepreneurial careers, angel investors, and now multi-billion-dollar companies started out with less than $10,000. Some with as little as $1,000.
Since we mentioned angel investors here, keep in mind that in fundraising storytelling is everything. In this regard for a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
So, whether you are just starting out on a tight budget, and needing income fast, or you need to tighten up to survive long enough to thrive, check out these ways to reduce startup costs.
Research, Research, Research
Most go out of business because they didn’t do their research.
This is the easiest and simplest part of entrepreneurship and one of the ways to reduce startup costs. Don’t set yourself up for disaster by skimping on it.
Make sure you’ve researched your competition, the need and pain your customers have, business model, pricing, the direction of the market, and more.
This is essential for nailing product-market fit and marketing the first time. Failure to do this will lead to the most financial waste and burning through your budget, without getting money coming in.
Don’t Spend A Dime Unless You Absolutely MUST
The vast majority of startups waste an enormous amount of money on nice-to-haves. Which is why most probably go bust very quickly. As part of the ways to reduce startup costs this is an easy one to get.
It’s like sending a kid out to live on their own for the first time. If they are splurging on Uber or a new luxury car lease instead of public transportation or a bike, and are living off of uber eats and hiring a maid instead of eating ramen and doing their own laundry, they are going to be calling you crying that they can’t make the rent pretty quickly.
This really requires drilling down to the absolute most fundamental MUST have items. If you can survive without spending on it for now, then you can’t afford it.
This definitely applies to office space. You don’t need it. It may apply to patents and trademarks for now. You probably don’t need any professional audio or photography equipment.
Some highly successful startups have even begun without a website, company name, logo, or dedicated phone line. On the video below I also cover in detail proven habits of successful entrepreneurs.
Refusing to spend on luxuries will also save you an enormous amount of time. Precious time that you could be using to sell and generate revenues.
Invest in Advice First
Expert advisors can save you an enormous amount of funds that can get eaten up by unnecessary spending, falling into common pitfalls, or simply wasting valuable hours reading incorrect and outdated information on the web.
As you are looking into the ways to reduce startup costs, keep in mind this can apply to general business coaching, marketing strategy, tax strategy, and startup fundraising campaigns.
Businesses have been built with 100% remote staff and have been operating virtually since at least 2005. That makes full-time in-house employees a luxury in 90% of scenarios.
Not only are they expensive, and mean extra dollars handed over to the government and benefits packages, it also means taking on great financial liability. One frivolous or malicious lawsuit could crush your brand reputation and finances.
Whenever possible use on-demand freelance help. And today there is virtually nothing you can’t outsource.
When you absolutely must bring in full-time staff (if ever), then consider creative compensation packages. What perks won’t cost you anything out of your own pocket? Can you offer options and equity in exchange for a lower salary?
Focus On The MVP
The startups which survive and last long enough to win are those which are the best at focusing and keeping it simple.
It often means being taken to what some would consider an extreme level. Though if you want exceptional results, you have to be capable and disciplined in doing what most others won’t.
When it comes to your product or ways to reduce startup costs, it means focusing on getting your MVP done. A stripped-down minimum viable product. There’s a good chance you can strip away 80% of the features and bells and whistles you are planning. Keep it simple. Add on later.
Use Free Trials
Use free versions of everything you can. Even free trials can be a huge help. Every week and month you can buy yourself without spending is another week and month of being in business or funds you can use for marketing and sales to generate income.
This is especially true of software. Use the free versions of software until you must upgrade. You might even apply this to internet service.
This may not be a long-term solution of the ways to reduce startup costs, and it can’t be your only one. At some point, you need cash from sales.
However, you may be able to offset and avoid many expenses by bartering. This may even be a very impactful and strategic way to get your product and brand out there and into users’ hands, and to get it to spread.
If you do really good at reducing your startup costs, and you still aren’t making the numbers work, then you have to increase your income.
One of the greatest ways to do this is by preselling. Get the money coming in. Money that you can spend, and don’t have to pay back to a lender.
Or you may choose to raise equity capital that can fuel recruiting, marketing, and other necessary expenses to grow.
Hopefully, this post gave you some insights as you are looking into ways to reduce startup costs.