Statistics about startup funding show that 77% of small businesses rely on personal savings for their initial funds. One-third of such companies use less than $5,000, while $10,000 is generally needed to get a business started. Only 0.05% of startups raise venture capital.
These numbers show the importance of being able to save resources every time you can. And today, we will look into some practical ways of doing that and mention some handy tools.
Use software to save money
First of all, almost always you can find some decent free alternatives to well-known software. For example, if we speak of accounting, almost everyone has heard of QuickBooks. This is a trendy tool, but it might be expensive for a new company. Also, it has some restrictions when used by a non-US resident. For example, you won't be able to create payable invoices right from QuickBooks unless you've got a Green Card.
Happily, there are free alternatives, and Wave is one of the best options. At no cost, you will get the same functionality QuickBooks provides, including payments.
Wave app pricing. All the needed accounting features are free
There are other ways to save by using the right software. For example, companies often send gifts – to partners, counterparties, customers, etc.
There is a tool called Gmoji that fixes the problem with most gifting services (e.g. they are opaque, hard to use and the gift options are too limited). Gmoji provides real gifts that your company can brand and generate in an emoji-like image with a link that is sent to any recipient. The gift recipient simply clicks on the image link and gets the details about the gift. Gifts include, meals, coffee, flowers and more. You will save time and money and get all the data you need to close a sale or generate brand loyalty.
Gmoji-coded gift. The recipient just needs to scan the barcode to get the details
Also, you can use the Gmoji gifts in your marketing to attract new customers at reduced costs. Sending messages with images is much cheaper than running a real offline gift distribution campaign.
The workforce is the most significant source of expenses for any business. In the beginning, hiring a full-time employee might be too hard for the company. Nowadays, there are multiple tools for getting access to the best talent worldwide at an affordable price. Freelance websites like Upwork will help a lot here.
First of all, you will pay contractors based on their performance, not time spent in the office. Second, you will save on benefits, and in many countries, medical insurance alone may cost hundreds of dollars per month. Contractors will take care of their taxes, insurance, and other expenses by themselves, which is much more convenient for a startup.
Upwork, Fiverr, and other similar sites all have a rating system where you can see the past performance of a contractor, chat with him or her before starting, and your money will be protected by the service. If the work is not done, or the result is bad, you will get a refund.
Freelancer search on Upwork
And the main thing: you won't be limited by a local talent pool. Instead, you can get professionals from all over the world working on your product!
Do you really need your own office right away?
Rent always takes a significant place in the costs of any company. Sometimes you just can't avoid it, but many IT startups do not need a permanent office; at least not right away? There are plenty of successful companies that started either in a garage (Apple) or co-working spaces (Instagram and Uber).
Modern trends include the development of remote work. According to some stats, 31 percent of employed Americans work remotely 80 to 100 percent of the time. If even Microsoft saves on offices by using co-working spaces, why don't you?
WeWork co-working space | Image credit: Unsplash
There are lots of co-working spaces out there, the most famous is WeWork and Regus. Chances are that you will be able to find a great space in a very convenient location. Using a co-working space allows for flexible and reduced costs on rent, but on the whole office infrastructure coffee, snacks, and maintenance services.
The overall savings might amount to thousands of dollars per month. And this means a cash boost to your company!