Hack money incomes and outcomes
Find creative ways to avoid unnecessary costs and get as much free resources as you can.
In the beginning of our startup, we didn’t have an office. My partner and I worked from our home, so we did not have to pay for an office space. But after some time, we were starting to grow the development team. We needed a place to meet with everybody. We rented a place at a very low cost. We tried to find co-working offices, but in our region it would cost more than having our own space. Then we needed to buy furniture. We discovered that new furniture prices were very expensive. We found a great alternative: asked some relatives for donation and also looked in auction websites. We could set up everything we needed for the office with less than US$500.
“In our company we have policy that you can spend company’s money on whatever you like, but you should treat it as it was yours. If you need something, it is ok to buy it, if you would pay for it yourself, too. It is kind of test that your really need that.” – Veli-Pekka (entrepreneur).
Startups usually have very little money. In the beginning, they do not have revenue streams and need to find ways to have money for their first month’s costs. The challenge is to keep costs as low as possible and the incomes sufficient for these costs. Furthermore:
There is no revenue in the beginning of startups and costs are high. It is a challenge to know exactly where to spend the few resources a startup has.
Spending money wisely is as important and earning money as fast as possible. The best uses for money in a startup are those related to developing the product and marketing. Administrative costs must be as low as possible. Salaries also should be as low as possible. Even if the startup has received an investment, spending the money on the right things can be the difference between success and failure.
Eliminate unnecessary costs and get free or cheap resources as much as you can.
There are many ways to save money in your startups. Moreover, often there are great alternatives in your ecosystem to raise inexpensive resources. By focusing your expenses on essential things such as product development, customer development, and marketing, you maximize your resources and accelerate the business model implementation, anticipating revenue and increasing your chances of success. Furthermore, if you use “free” or “cheap” money offers, you are in advantage compared to your competitors.
Here are some ideas:
- If some people work from home, you don’t need to have a big office (or even have an office).
- You also won’t have to waste money with equipment and furniture.
- In some cities there are free co-working spaces for startups, use them!
- Save money by offering equity shares instead of high salaries.
- Buy used equipment and furniture at auctions websites
- Search for government or universities programs that foster startups development (ex: startup Chile, Startup Brazil, PIPE-FAPESP, USA NSF-ISBIR, Israel OCS, etc.)
- Use cloud providers programs for startups to save costs with infrastructure. Almost all providers such as Google,
Rackspace, Microsoft, Amazon, and others offer free tier until US$100.000 for one year.