Smart & safe ways to cut costs for startups?
Daniel Engels
18 replies
VC funds are getting scarcer in the current economic context.
The companies are less willing to buy innovative solutions. The consumers limit their spending, too.
So it's time for startups to come back to the basics. To start lean and maximize runway.
Do you have any tips for a smart and safe way to cut functioning costs?
Replies
Murali Gottumukkala@murali_aasaan
We have been forecasting this since the beginning of the 2nd quarter, and our unit economics have been tuned to withstand for the next 2 years. Everyone who is working should have a defined role and also a path to progress. As long as that is created, the rest should be inconsequential.
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@murali_aasaan is your project bootstrapped or VC-financed?
Hiring carefully is the first thing that comes to mind.
Also, marketing needs to become more creative in order to drive word of mouth, need to stop depending on paid marketing.
@chetan_natesh Paid marketing isn't an unncessary expense. Some paid channels might convert rather fast. If they bring a proven positive cash flow, I don't see any reason to cut it.
@daniel_engels Good point Daniel, if cash flow is positive then no problem.
I was only talking about hopeful marketing.
1. Use The Right Technology.
2. Rely On Modern Marketing Methods.
3. Go Paperless.
4. Create a Budget.
We are cutting on paid ads (dropped Google Ads altogether) and spending more time on SEO/social media reach.
@sergey_kornilov1 the risk is, it might take some time before you observe the ROI of efforts on SEO and social media.
It probably depends startup from startup, but in my opinion - the major costs come from salaries (if there are any) or technical (sometimes, legal) support. Many of the services are still available for free when you join some incubator and accelerator programs, for instance.
They are a good source of resources and also marketing, if utilized rightly. Do you have your suggestions? Would be great to hear out!
@technufllc It's so hard to make a safe bet on cutting the expenses. Cutting the salaries or bonuses might demotivate the team. (It's even worse for layoffs).
@daniel_engels yeah, that of course - what I meant is focusing on getting motivated employees, team members and if we are talking about startups, sometimes giving shares as bonus (instead of money) can increase the motivation, cut real cash costs and get quality and loyal partners. At least, I have hear some of my acquaintances doing so and so far they are fine with that decision.
Always good to estimate risks and opportunities, what do you think?
1. Use The Right Technology
2. Rely On Modern Marketing Methods
3. Go Paperless
4. Create a Budget
5. Lower Your Financial Expenditures
7 Ways To Lower Operating Costs
-Work Remotely
-Don't Buy An Office Space
-Pause Hiring
-Outsource Services
-Automation
-Identify Inefficiencies
-Freeze Large Investments
-Cancel Unneeded Subscriptions
The head of our startup, due to limited funding, went through the cultivation of his own staff. He recruits interns and volunteers. Some of the interns and volunteers are leaving. The other part remains. Volunteers may eventually become interns. Interns eventually become juniors. Next comes the long and painstaking work of growing juniors to middles. The salary in our startup is lower than in the completed projects. But those who joined the backbone of the team are saturated with the idea of ​​a startup and understand that when a startup develops into a successful project, they will have an income many times greater than now. I have walked this path myself and am already a middle-level engineer in the testing and analytics department. I believe in the success of our startup. May the force be with us))
@daniel_engels Spending wisely on hiring right talent is half work done.
Strategize and revise plan and budget cost every month. With right team, you can efficiently run startups and still cut operational costs.
I always think about this when thinking about cost:
- is there anything we can do to reduce the cloud cost?
- before hiring a role, can I replace the role with a tool or automation?
I was hired as a CTO for online media. And two things that I did after a couple of months of assessment are replacing our microservice with WordPress, saving ~$2000 per month, and doing a lot of automation with our infrastructure to avoid hiring a QA and DevOps which might cost us ~$3000 per month.