Cut overhead wherever you can and you become the kind of lean startup that survives beyond the first five years. Here’s how.
At first it might seem like something easier said than done, but if you put your mind to it, there’s always ways to reduce expenditures.
Look for ways to negotiate better rates with your suppliers by leveraging process efficiencies, emerging technologies and possibly economies of scale.
And are you buying anything for your business that you could do without? If you have even the slightest doubt about whether you absolutely need something, that means you might be able to stop buying it.
Just about anything you might hire someone to do can also be outsourced or done in the cloud for less money — and that’s one of the easiest way to cut overhead.
At the very least, you can find contractors or temporary employees to do the work. Perhaps you can bring in an intern instead of hiring a full-time staffer. You can cut personnel costs fairly easily if you put your mind to it.
Although online advertising is presented as a cheaper alternative to offline promotions, things can work out very differently in practice if you don’t take a disciplined approach.
People who are new to online advertising have a tendency to overspend: whether they’re using Google AdWords or even buying ads on Facebook, it’s all too easy to target too broadly.
Narrowing down the audience targeting can make for a much more cost effective promotion, and while experts can make it look easy, it actually takes time to learn how to master online ads.
Get the ball rolling by lowering the budget you allocate for the ads in the online dashboard.
A variation on public relations is event marketing, Find a sponsor that would co-brand an event with you and either pick up the tab or provide expertise that you might still be acquiring.
Look for sponsors that make good trading partners — they stand to benefit from the event in different ways than you do, yet they have expertise you need but don’t yet have (and vice versa).
Plan for Contingencies
Don’t let anything take you by surprise: Contemplate all possible worst-case scenarios and prepare for them in advance.
Make contingency plans and make syure you have adquate protection for your business, including insurance — while having to pay insurance premiums might at first seem like the opposite of reducing overhead, it’s actually a money saver in the long run.
Cut Overhead Yet?
Now it’s your turn, fellow entrepreneurs: How have you tried to reduce your overhead?
Jackie Cohen is an award winning financial journalist turned turned financial advisor obsessed with climate change risk, data and business. Jackie holds a B.A. Degree from Macalester College and an M.A. in English from Claremont Graduate University.