Keeping startup costs low when creating a business is quite easy to say. In practice, this is far more difficult, though, as it seems like everything costs money while not everything offers a decent ROI. Once a business is set up, keeping costs as low as possible will not only keep cash flow healthy but can increase profit margins. Increasing overall profitability simply by being cost-aware is a no-brainer, but some companies impact the quality of product or service offered by trying to decrease costs. Understanding that there are certain costs that cannot be lowered is important as well. Far too many times, companies try to reduce costs in the wrong areas, so getting data on costs and putting together a cost-efficiency strategy is imperative. The following are tips to help keep costs low at a company that will result in larger profits.
Have Staff Work Remotely
The largest cost for a lot of businesses that they have on a monthly basis, besides that of paying employees, is the rent for an office space. In today’s world, there are plenty of businesses that can easily be run remotely with everyone in different locations. Video chat software and instant messaging can make it easy to communicate and even see those that you work with on a daily basis. The bonus feature of this is that hiring can be done all over the country, so saving money on employee salary is possible. A person that is a web developer is going to ask for a far smaller salary if they live in Kansas than a comparable developer that lives in the San Francisco Bay area. A good option for meetings to be held is that of an office space that can be rented for a day, a few hours, or a weekend. Check out Meetinkz for a variety of different types of meetings or company events as this is a perfect example of a reliable alternative to renting a large office on a 12-month lease.
Build a Team of Affordable, Quality Freelancers
The freelance economy is booming around the world, with quality freelancers being available in nearly every field. Marketing is the perfect example of something that can be handled by freelancers, which will save far more money than hiring an entire marketing team in-house. Building a team of freelancers that can be relied upon for various tasks allows a company to scale its business. The ability to produce 1,000 pieces of content in a week might not be possible for an in-house team but can be done very easily by 100 freelancers that are hungry for work. Upwork can be a perfect platform to find quality freelancers, and the platform protects both you as well as the freelancer.
Hire Slowly, Fire Quickly
For those companies that decide to have employees work remotely, the freelancers mentioned above can be brought on for full-time work. This is the perfect audition for a person that results in a hire instead of being paid as a contractor. A startup needs to understand that hiring slowly and firing quickly is important, as letting a person drag it out for another month or two when they obviously will not work out is a waste of money. Internship programs are also great ways to see how an individual works and whether they are a culture fit at a company. Attracting top college talent can become far easier if a job is promised after graduation successful internships. Avoid hiring friends or family as this will make it far more difficult to fire quickly due to personal relationships you have with a specific employee. Slowly hiring will also allow a company to see if certain employees can increase productivity, making another hire not necessary.
Outsource Departments Like Accounting and IT
Hiring companies to handle things like accounting and IT is important as funding these departments can be costly without any benefit when compared to the company outsourced to. An e-commerce website, for example, wants to be up and running at all times, which can take 24-hour support. Hiring an overseas company makes this financially feasible as this would eat into profits by having a tech pro work every hour of every week of the year. Take a look at all departments that do not have to be in-house to see which can be cut in order to boost profits. Keeping a team small and streamlined during a company’s infancy can help set it up for success for years to come.
Keeping costs low is going to take a proactive approach, as it is far easier to throw money at a problem than find a cost-effective way to solve it. Take the time to do an itemized cost report and get to work saving money ASAP.