Question: What's one tip you have for keeping startup costs under control in the early stage of a new company?
Question by: Ashley
Hire People With Scrappy Attitudes
"Bring on employees that have a high risk tolerance and are committed to keeping down costs. You need people that are willing to take lower salaries because they see the upside of getting a lot of equity in the company. All employees also need to be resourceful in stretching available resources."
Keep Legal Expenses In Check
"New companies have many legal needs that may lead to large, unexpected legal bills. However, some attorneys offer flat project rates, which can allow for better budgeting on legal expenses. If an attorney will not provide a flat rate for the project, they might be willing to agree to a cap on the project, which also can help you prevent surprise legal bills."
Leave Room for Flex
"Most startups only look at how much their variable costs affect profits, and many business owners forget to factor in all the little things that really add up and make their business lose money, such as office supplies, Internet fees, website maintenance, etc. If entrepreneurs set a flex budget for their miscellaneous costs, then they leave room for error, like running out of pens and notepads!"
Find Income ASAP
"Conventional wisdom is that if you're building a great product, you can wait to eventually monetize. Don't believe it. If you can get an income source in place -- even if it's only offering a service to set up your software for bigger customers -- it's infinitely easier to run your startup. That income source may be a limited-time offer, but if you can put something out there, do it now."
Think Like a Renaissance Man
"Think small and learn. We sent one person to a Photoshop class, and he came back and taught the team, which was far less expensive than sending everyone. When we had our first website built, we paid the web developers to teach us to code the simple things ourselves, and required the site architecture to be turned over to us when the build was complete -- allowing our web expense to stop there."
Our Money Is Your Money
"When we dish out our company card, we tell our team to treat the money as if it were coming out of their own pockets. This makes them think twice about their purchases -- conducting an extra round of price comparisons and eating out while traveling. When everyone treats the company money as their own, it really helps to rally the team to make more sales and appreciate the cash flow process."
The Beauty of Bartering
"What service/products do you have that you can trade with others? I have traded advertising, haircuts, and retail space for videos, PR releases, and food. If you really try and make an "inventory" of things you can trade, you can save a lot of money. You can barter through Craigslist, word of mouth, and community bulletin boards, and potentially meet new customers."
"At Sentry Centers, we have never signed a single contract without negotiating. The practice has become ingrained in our culture -- now, nobody will ever walk a contract into my office without having hustled out every last penny. The result is 30 percent less costs across the board."
Do Less, Better
"The less you do, the better you will be at doing it. If you don't have the infrastructure to support a sales team or enough work for another employee, don't hire them. The fewer obligations you have, the faster you can pursue new opportunities."
Simple -- Sell More!
"Stop spending money on things and sell more. Go out and make presentations to people and get eyeballs in front of your offer. This may mean that you will face rejection, but once the register begins to ring, you can start to have things under control."
Count in Cases of Beer!
"A case of beer costs around ten dollars. At Jimdo, discussing everything in this currency helped keep things on a tighter budget. Should we buy this, it would be forty cases of beer per month? Heck no! This currency helps keep things in perspective and forces you to think twice about your spending in an enjoyable way."
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.