Cash flow is one of the biggest challenges for any start-up and many teams will know that cash flow significantly contributes to the famous statistic that 9 out of 10 start-ups fail.
That’s why any strategy that can help cut costs is very welcomed among start-up teams, as managing business expenses invariably means cutting down on expenses.
However, there’s often a perceived trade-off between cutting costs and facilitating growth. This is a fallacy; it is rarely a zero-sum game in that respect.
In most cases, you just need to trim some of the fat around the edges to get lean, which can actually stimulate growth (especially at an early stage).
3 Ways Startup Can Cut Costs Fast
1# Automation
Technology is incredible at doing things more efficiently than humans. So why not take advantage of the age we live in? When it comes to employees, time might not always be money, but it can certainly be growth.
Why make your employees regularly do tasks that could be automated because you will have paid for their time anyway, instead of letting them explore various issues relating to the business in their free time?
Accounting software is a great example of this – you can automate payroll and bookkeeping easily and reduce the need for a full-time accounting or HR designated individual. Using software also reduces the chances of human error creating costly mistakes, so it can save time and money that you might use fixing those mistakes.
Another good example that’s gaining popularity and is set to be one of the big trends of 2020 is the use of chatbots.
Putting these lines of code on your site can in many instances eliminate the need for customer support or sales support.
Of course, you will always want a customer to be able to talk to a real person, but chatbots mean that depending on your sales you can just take all calls yourself if they are infrequent enough. Even if they are not, you will save a lot in customer care costs. Speaking of calls…
2# Phone Tech
A business needs everybody to be connected, but using traditional landlines or even mobile phones in some cases can be inefficient or inflexible if you have a rapidly changing team.
Traditional solutions also don’t work well with scaling, being costly and time consuming when you want to amend your packages. That’s why flexible phone tech can help start-ups.
Take Phone.com, which uses the cloud to link a service to a mobile phone, standard landline, computer or VoIP phone – meaning start-ups don’t need to outlay on specialist hardware.
It’s one example of a pbx solution, and there are many – check out a phone.com review for more details about how these types of tech can cut costs for businesses compared to traditional solutions.
A virtual office phone system also serves the benefit of allowing people to do remote work, which can reduce needs for office space and allow you to save on utilities.
3# Affiliate Marketing
Marketing campaigns can be expensive as well as unpredictable, and unless you’re a seasoned marketer, you might be throwing money at something that might not be as effective as you will have wanted it to be.
You will need to improve your chances of making sales while cutting costs at the same time. It seems like an impossible task, but affiliate marketing and the use of referral programs can help you massively. These programs are great because they do cost money, but this money comes with higher sales.
Referral programs may require spending a bit more, as you need to give money to people for telling their friends about your start-up, but consider that people will almost always trust those who are close to them over your other marketing channels.
Referral programs are also great for guerrilla marketing – finding loads of people on social media who have modest followings and then getting them to advocate for your product is a great example of this.
They will welcome any amount of income as they aren’t professional or semi-professional influencers, and if you’re clever their friend groups will see the result of a coordinated campaign — with all their friends suddenly being into this new craze.
Affiliate marketing is excellent in terms of cost-cutting, as it works on a commission only basis. It means that if you are spending a lot of money on marketing, you’re earning much more, but affiliate marketing often needs an attractive enough commission and the right products.
Nobody wants to sell a product that they don’t feel excited about, so these programs do need the right investment in branding.
Resources:
- Lean Small Business: How To Cut Costs Without Reducing Quality
- 9 Cost-Cutting Hacks for Small Businesses
- 6 Viable Cost-Saving Opportunities for Small Businesses
Author: Abdul Mateen
