Cutting Costs as a Startup

Cutting costs is as important to businesses just as oxygen is to man. High cost of doing business is the surest way of suffocating the enterprise, even though it may be making some measure of profit. The economic recession which found its way into the Nigerian economy has made it even more imperative to minimise cost, even as a startup enterprise.

While we may not be talking about profit making here. We however, will be considering a number of ways through which a startup entrepreneur may reduce the cost of doing business and waddle through the murky waters of entrepreneurship.

Stay Virtual

The excitement of making some profit off your first sales or getting massive referrals and recommendations may be so overwhelming that you actually don’t get to sit and decide if your startup is ripe enough for an office space. The image and ambience of a formal office may be enticing too but is adding any kobo to the revenue? Not to forget that renting or leasing an office space doesn’t come cheap and may pay a huge hole in the purse of a young entrepreneur. Nobody is saying that getting an office space isn’t a wonderful idea, but the big question is: is the cost commensurate with the expected revenue? If the office space and location goes to the very root of the business, then why not give it a try? For a startup, it is more advisable to share an office space with another startup or other business, so as to save more money which can be further used to employ more hand for better productivity.

The new trend is for startups to remain virtual and hover around the cyberspace until they are financially strong enough to own an office space. Irrespective of what aspect of entrepreneurship you may be into. A number of businesses even remain online and still carry on business, thereby saving costs on office space, electric bills and even taxes. For example: Seun Osewa’s nairaland.com and until recently, linda ikeji’s blog.

Buy Wholesales

Another way a startup entrepreneur incurs costs is by buying things needed for the enterprise in little quantities. The idea is to reduce spending, but in the long run it does the opposite, as more monies are expended for less. Take for example; office stationeries, the more the cheaper. Same thing applies for almost all things needed for running the business. It even affords you the right to ask for a discount from the seller. That way, you reduce cost of transport and also it covers for an unforeseen inflation, should the price increase later.
Buying in bulk makes you a prime customer or client to your suppliers. The advantages are numerous, as you may ask for supplies and pay later or that you may ask for up to three different quotations from different suppliers so as to get the real market price and thus avoid overspending.

Automate Your Processes

There are a number of specialized services that a startup entrepreneur will be needing in his business as soon as the enterprise moves up the growth chart. For example, you’ll need the services of an accountant or a personal assistant. This comes at considerable cost to the purse of the entrepreneur. There are a number of software or apps that van effectively do the job(s) required and would only need an administrator, (which may be the entrepreneur himself). Also, only employ for your weakness, for things you can’t do yourself. If you can handle an extra position, do it. Chances are, you’ll do it with more passion that an employee.

Hire Cheap

Getting the right and qualified workers for startup could be of immense benefit to the enterprise but may be drilling a hole in the pockets of the enterprise, if they are yet to get a financial breakthrough. You may want to get the free services of friends and family on specific tasks or even employ freelance or casual workers who may be cheaper than the usual employee, and still provide the same service. A sure way of getting cheap labour in Nigeria is to employ the services of interns or Youth Corpers of the NYSC. With a little stipend or salary, you are sure of getting an almost equal service as a full time employee would give. A startup should not be burdened down with crazy overhead costs as salaries.

Prioritize and Review Costs

There are some expenditure that expensive, yet very necessary. The young entrepreneur, interested in reducing cost, must find a way to set aside the things that not immediately or directly beneficial to the profit making of the organisation. Some expenses should be pruned down or outrightly dispensed with. For instance, expensive swivel chairs, air-conditioning systems, vacation tours, luxury personal car(s) etc. Pay attention to little details. Little things matter in finances.
You may want to also review all telephone, internet and other subscriptions. Discover how they add to the business and pay accordingly. You may consider delaying payments also for supplies that are not immediately needed for the enterprise.
The good thing about cutting costs is that it puts you in a better position to assess the progress or otherwise of your enterprise. The more you spend on important things, the more you get eager to make the money back. Provided your business strategy is tested and trusted to guarantee financial returns.

SOURCE: https://founders.com.ng/2017/07/30/cutting-cost-as-a-startup/