What is the best strategy to reduce your Startup's operating expenses?

Ullekh Niraula
49 replies
By now, it’s becoming clear that the economic disruption caused by COVID-19 is unlikely to vanish anytime soon. What strategies are you using to lower your monthly operation costs, but still getting things done to thrive?


Helene Auramo
We have decided to end the monthly subscriptions of some of the services we use. Harvest was the first one (unfortunately).
Ullekh Niraula
@helene_auramo That's a good idea. How do I handle the situation where i want services still want to reduce expenses? Should i try low cost services?
Ankit Chhabra
@helene_auramo @ullekhniraula Scout for options for the same service you are using. Unless the service you are using is indispensable, there's no point in switching to another service just because it is relatively inexpensive because the transition at times is time-consuming. Alternatively, always go for the plans that are billed annually because if you think of the long term, you'd end up saving at least 20-25% of the cost for that service. Paying upfront for 12 months at that moment seems tough but once you pay you'd feel light for the remaining months. :)
Yocheved Boyarsky
@helene_auramo @ullekhniraula Appsumo often has services similar to the more prominent ones and most of them are lifetime deals - you pay only once, usually at a really low price.
Harri Arain
@helene_auramo @ullekhniraula Stafftimerapp is a low cost if you are looking for a services that cost almost nothing.
@helene_auramo I hope it's not too bad to do a mini promotion here. Try trackabi.com instead of harvest. It's much cheaper, features are similar, and a lot more features are coming soon
Ahmed Maher
Organize your expenses using https://www.tribal.credit (try us)
Nolwen Dupond
Move some SaaS subcription to yearly to get the discount.
Ullekh Niraula
@nolwen_ Okay but how about payroll?
Rohit philip
It depend on how big your team.. for Payroll i would recommended to use tool like gusto or Justworks.
Aaron Bailey
@rohit_philip1 Rippling offers 6-months free payroll if you haven't been a customer yet for certain startups. We have that deal publicly available on builtfirst.com
Rohit philip
@rohit_philip1 @aaroncbailey - thanks for sharing this very good site for startup to get better deals.
Fabian Maume
If your lease agreement allow it, get ride of office space. Remote work is there to stay.
Ullekh Niraula
@fabian_maume Hi Fabian, i have already done it. Even started a startup to provide vetted remote experts at a low monthly flat fees.
Kayla Willsey
My suggestion would be to thoroughly look through your expenses- write down everything for at least the past few months. Group them by essential, useful but can reduce/ survive without them, and extra. Here, you might find the little things that you don't even realize that you are spending money on. From there, see if there are either any promotions for discounts or a cheaper version of your current expenses (think of calling your phone company for a cheaper rate), or parallel products/ services that you can use for cheaper. (Other things would be to check out any bank costs you're paying, what purchasing platform you're on, even things like what lightbulbs you're using if you have a physical space.) Like someone else said, anything you can currently do by yourself, absolutely do that. BUT, in the long -and short- run, if you can't do it yourself, find the highest quality for as cheap as you can. A poorly done task will eat up both your time and money fixing it up down the road. I hope these suggestions help or at least give you something to think about!:)
Ullekh Niraula
@kayla_willsey Thank you so much for taking your time to write this long suggestion. I really appreciate it. Out of curiosity, how can i find the highest quality at cheaper price?
Iain Cambridge
If you're a web startup, one of the biggest savings you could get is switching to dedicated hosting from cloud hosting. 49 Euros for resources that it would cost you 600+ euros on digital ocean.
Iain Cambridge
@that_guy_iain @ullekhniraula Monthly. It all depends on how much you're spending on hosting. If you're hosting is 30 euros a month on a cloud provider, it generally makes little sense to switch to a dedicated provider. But if you're spending even as little 100-300 euros a month then the savings a dedicated server provider can bring a worth it. You can also go all the way down to a dedicated server for 5 euros. Some providers I would check out are kimsufi.com and hetzner.de
Valentin D
I use Moona payment method. No transaction fees.
Victor Burke
I think a culture of "Is that really needed?" is a good way of focusing a team on spending. Unless something is bringing real value at an early stage it may be best to try and 'do it yourself'.
Abe Winter
throw cheaper parties
J. Mendez
Good question. I'd love to hear what other people have to say. Personally, I take yearly payments of my must use services. Normally there is a smal discount if you pay on a yearly basis. In addition, I'm using a serverless architecture on AWS, very low cost so far.
Aaron Bailey
I used to work at 500 Startups as head of partnerships. One of the main things folks get out of accelerators is the corporate discounts/perks that come through partnerships team. I just quit 500 to launch builtfirst.com to try to democratize access to perks. Some are publicly available, others you have to input a bit of information to qualify for. We're in a beta right now, would love to have you onboard and work with you to lower costs.
Ullekh Niraula
@aaroncbailey Wow Aaron! It looks cool. Just signed up and waiting for the approval. How do you reach them to get perks? It's interesting though. I am also working on something to reduce the startups/businesses costs by providing qualified professionals at lower fees. Would you love to be in my podcast and discuss on the topic 'Cost Reduction Techniques for Startups'? By the way, I am getting married in 5 days. We can do after that if you are interested. Thanks!
Anuj Vaishnav
@aaroncbailey Just signed up! Out of curiosity, how are you planning to monetize it in future?
Devanand Premkumar
@aaroncbailey Hey Aaron, Just checked out buildfirst.com. Looks pretty impressive, particularly the public perks. Kudos to you on building such an amazing and supportive environment for startups. I was just wondering how would you be able to expand more on these such perks.
Aaron Bailey
@aaroncbailey @devaonbreaches Hi Devananad. I have just over 200 corproate relationships I've cultivated in my time in SF so I'm slowly onboarding these companies first and many of them will intro me to other partnerships people in the city who also want to offer perks. Many of the perks that are posted are not public so make sure when you sing up to share some additional information in your profile and you'll be able to see more perks you qualify for automatically.
Aaron Bailey
@aaroncbailey @anuj_vaishnav Hi Anuj, We're already monetizing. The goal is to keep the site free always for founders and VCs who onboard their portfolios.
I am solo developer so basically do things yourself even if paying may be quicker...bcoz you will learn something ....getting harder though..
Harri Arain
Go remote and reduce your costs by using tools which help you save operational cost and divert it into marketing expenses.You can try (stafftimerapp.com) free for first 2 months. But you should look for mixing up things like splitting tasks between team try to get diverse team automate marketing.
Chetan Bhati
Reorganize the salaries temporarily in a way which is affordable by the employee and also provides temporary relief to the company. Offer either interest on the postponed % of salaries or equity of the equivalent amount to the employees who are willing to accept delays. Maybe you can also offer to cover for any interest on personal loans an employee takes for the next few months if they have agreed to a receive a % of salaries at a later date.
Probably there is no ultimate solution that would suit any startup and probably you shouldn't expect a piece of advice that will save you 90% of your current expenses. Just analyze where the money goes: - Office expenses — try to find a cheaper workspace or go remote - Switch from expensive cloud hosting solutions like AWS to cheap (but still good) dedicated servers - Outsource your work abroad to a country with a lower living wage but be very careful, the salary you pay should be a good IT salary in that country, otherwise, low-cost underqualified staff may quickly mess up the code and bring everything down. What you shouldn't do is trying to make things you don't understand on your own. E.g. a standard pitfall is when people try to make their projects using WordPress by installing a whole lot of plugins.
Ullekh Niraula
@andrey_mi Your suggestions are to the point. Yeah, there are lots of ways to drag down company expenses. I'll keep your suggestions in mind.
Stephane Ibos
Quite good suggestions you received in all the comments already. I agree with all of them. I would add that your biggest expense (given you already have given up the office) is probably your workforce. This is where you can focus your effort to get real "savings". Now - making savings on the back of your staff is never a good idea if there isn't a fair compensation and a rationale explanation. I think the explanation is relatively straight-forward here. As for compensation, you could offer extra options in your Share-options program (assuming you have or plan to have one). It can be great for them on the long term! You could also offer wage reductions associated with work-time reductions, which may appeal to some of your team members. Last, but not least (and certainly not pleasant) - this is a time to focus on what strictly matters. You may have to let go of some people. Good luck!
Rohit philip
If you are web startup - the following are the stuff will help you to cut cost. 1. Go completely remote – Cancel all your lease 2. Move from expensive cloud server like AWS (Good options are available in the market – try Linode / Digital Ocean or buy dedicated VPS) 3. Evaluated your other SAAS product you pay every month. Try to into the data and make call to renew their services. 4. Talk with your team on the current financial status of the company. More ideas will come from internal team.