For most startups, cashflow is the biggest challenge. If you don’t have enough money then you can’t grow your business, add talented people to your team, and develop new products. If your startup runs out of money and fails then you and your employees will have to go back to your nine to five jobs.
While making money as a startup means having a great business idea and getting sales and investors, keeping that money and making sure your startup is profitable is about money saving. You may be making mistakes that are wasting the money that your startup has earned.
Technology is an important part of any startup as you use your laptop and phone to reach out to new sales leads and market the company. You will need technology that can multitask as you will be very busy at the beginning of your startup. You’ll also need technology that you can take anywhere with you as you may need to work on a pitch or an idea while you’re on the move.
However, power and portability aren’t exclusive to brand new tech and you may be wasting money this way. By not buying second hand and refurbished laptops, phones and other technology for you and your team members, you are paying much more than you need to. For comparison, an 11 inch MacBook Air is more affordable when you buy it refurbished, with some refurbished MacBook Airs selling for less than $500 and with that, you’ll get a Glossy screen, Intel processors, and more than 100GB of storage. A brand new MacBook Air can cost more than $1,000 so you’ll pay far more for a device you could have got refurbished.
Another mistake that startups make is that they rent out office space. Office space can be one of the biggest costs of doing business, but many businesses don’t need to pay for it. The average price of office space in Washington, D.C. is $595 per square foot per year or $61 per square foot in Columbus, OH. The average office space used per employee is 150 square foot, meaning that it could cost you nearly $90,000 for an office for one employee in Washington or just over $9,000 in Columbus.
You may not need an office if you don’t have to take meetings in person or if you don’t have local clients. Your customers and clients can use the Internet to reach you and you can host meetings in Skype or on Google Hangouts without having to pay for a conference room. It’s also much easier to provide updates via emails or text messages than it is for them to come into an office, so use digital channels to cut the costs and save money on an office.
When you begin your startup, you may have some idea of who your target audience is and why they may want to buy your product. However, it’s important to test this out and not just make an assumption as this can cause problems.
If you create your product and develop features without talking to your customers, you may find that you’ve left out a feature they really want or that you wasted money on features they don’t. That feature could be what makes them want to spend money or keep that money in their wallets and so it’s important to speak to them before product development or launch so that you don’t waste money on something that won’t make any.
Becoming a successful startup isn’t just about having a good idea, you need an idea that is different from what your competitors are doing. Buying products in bulk to save money and then selling them to customers for a lower price is a good idea, but it won’t get you anywhere if your competitors are already doing the same thing.
If you haven’t done your competitor research yet, then this article about competitors is a good place to start. You need to look at their products, why people like them, what customers pay for those products and how the company markets them. If you can learn from this and make changes to your startup, then you may save money or do something better than your competitors.
Startups have so many marketing channels available to them. From social media to email marketing and from influencer marketing to YouTube ads, it can be difficult to figure out where to spend money. One thing that will waste money quickly, however, is by marketing your startup and products without a plan.
A startup marketing plan will help you spend your money in an effective way. Your target customer may not use the marketing channel that you have put most of your money in, or they may prefer to see images and videos and not plain text ads. By not having a plan, you are just throwing money at marketing channels to see what works and that doesn’t help you to save money or properly see which is the best marketing channel for your company.
When running a startup, it’s important to remember that money is the goal. While you want to provide great products for your customers and grow your business, if your startup isn’t making money then it can’t be a success.