How to Launch Your Startup & Keep Your Costs Down
With economic indicators surging, entrepreneurs are taking the plunge and launching their own startup businesses. Potential business opportunities are immense, with one recent article citing 75-plus ideas. There are any number of reasons why entrepreneurs decide to start a business—passion about an idea, the desire to work for themselves, better work-life balance … the list could go on.
The long-held concept that half of businesses fail within one year is something that can be tagged as “fake news.” Data reveals that 30 percent of new businesses fold during their first two years of being open, half make it to five years, and 66 percent close down shop during the first 10 years. An impressive 25 percent make it to 15 years or more.
Yet, even though the failure rate isn’t as alarming as many believe to be the case, the reality is that not every startup is going to succeed. While there are any number of reasons small businesses fail, the inability to control costs is certainly one of the factors. Thus, for the tens of thousands of new entrepreneurs who just recently launched a new business, cost is certainly top of mind. Getting a good start “out of the gate” can mean the difference between success and failure. Optimizing your initial capital against revenue—or expected revenue—is critical.
Following are some recommendations on how startups can contain their costs:
Leverage Cheaper Online Services
There are a lot of online resources that you can leverage for lower cost services than brick-n-mortar providers. For example, hundreds of thousands of small businesses have used online legal service providers like LegalZoom to compile their requisite business documents. Or, in contrast with the past when small businesses would outsource accounting or payroll services to a third-party firm, many are turning to online accounting and payroll services like Intuit or ADP.
Don’t Tether the Business to a Physical Office
Physical office space is expensive—often consuming upwards of 10 percent of a small businesses revenue—and moreover it locks them into a long-term contractual obligation. More and more small businesses are opting out of permanent physical office space and using rented, on-demand coworking space or day offices such as Davinci Meeting Rooms instead. In addition to eliminating office space from the capital expense line item and reducing the amount of revenue spent on office space dramatically, coworking space and day offices provide small businesses with much greater flexibility in terms of employee growth, office location and expansion, and much more.
Offer Flexibility to Your Employees
Research shows that many workers in the workforce are willing to take less pay if offered greater work flexibility. Concerns for better work-life balance typically tops the list, with workers seeking greater work hour and location flexibility. Due to the proliferation of project management, communications, and video conferencing tools, remote work and telecommuting have never been easier. Additionally, data indicates that remote workers typically outperform their office counterparts who must come into a physical office and work fixed hours. Any concerns about the inability to have in-person meetings and interactions are obviated by the availability of the on-demand office.
Use Self-Service/Do-It-Yourself (DIY) Solutions
Hiring a third-party web developer to design and build your website is a cost that you can eliminate. There are various third-party web development tools that are easy to use and require no, or very little, knowledge of HTML coding. The same can be said about online video editing, web analytic, social media, and other tools. Why spend money when you or someone on your team can quickly and easily DIY.
Just as communications and other providers offer financial incentives if you consolidate your services as a consumer, the same type of offers exist for businesses as well. For example, for your phone and Internet services, you’ll very likely be able to reduce cost if you go with one rather than two separate providers. Another area to consider might be your use of live virtual receptionists and live virtual web chat agents. In this instance, Davinci Virtual could be your one-stop shop for both of these engagement channels.
Host Meetings in Rented Conference Rooms
Whether it is an internal team meeting or a session with a prospect or customer, coffee shops are a bad idea. In addition to frequent disruptions, you lack the privacy and presentation tools that such requires. Hotel rooms aren’t that much better, and they are 50 percent more expensive than on-demand rented conference rooms like Davinci Meeting Rooms.
I could add much more to this list such as purchasing refurbished equipment or optimizing SEO in place of online ads, but the aforementioned is a great starting point for a new small business seeking to reduce costs and hit the ground running. You never know. The next Amazon, Microsoft, Google, or Apple might be reading this post right now.