Utility focussed

How to reduce Startup expenses

 Everyone wants to save as much as money while going for a startup. This article will provide you a bunch of tips to reduce startup expenses & avoid layoffs.

We’ve earlier reported startups/company layoff news here and here but as such layoffs have become so frequent now that it’s no more a news but just an obvious reaction to the troubled economy.

As of now, more than 20,000 employees working at tech startups/companies have lost their job and this figure may exceed one’s wildest expectations in the coming months.

Seeing the current situation, we decided to put forward a bunch of tips for startup guys & entrepreneurs to avoid “painful layoffs” and still survive this crunch period…

Have a look at this eleven tips !

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1. Re-direct surplus/additional human resource

Although startups do not, in general keep surplus staff (for the sake of handling unplanned & overwhelming business opportunities), but if there’s anybody doing nothing relevant to your startup then better give him a break.

Mind you, layoffs are painful only to those who were working hard but still became a victim of the situation but those who were good for nothing (such folks themselves know that better) won’t take it as a big blow. You may re-direct those guys to some neighboring startup requiring few part-time folks. Hence this makes such a layoff a bit ‘painless’. The rest 9 tips do not involve layoffs at all.

2. Follow Barter economy

Trade your services rather than just selling them. You may be good at technology but spending big bucks on the editorial side of your startup and there may be a startup who’ve some under-utilized editors but have lack of tech support. Hence, trading/exchanging services can help you out in saving from critical expenses. You may try Craigslist for finding such service-trading partners.

3. If possible, have a fund-raise but assuming ‘it‘ to be the ‘last chance’

If VCs/Angels are still hopeful enough to help you have a fund-raise, go for it. It better to ‘Survive’ with less authority  than to ‘Get exhausted’ with more authority(such authority of no use then !). But assume that no more funds will come your way if you don’t show optimistic response to your investors this time.Remember, a dollar saved is a dollar earned.

4. Turn “full time employees” into ‘Work at home’ or ‘Contract based’

To save out your office space and cutting running costs,this method can prove one of the best ways to avoid layoff. Folks remain connected(you can call them back when things go fine) and still you save crucial bucks as they aren’t full time.

5. Cut out Travel & Marketing expenses

We are talking about survival at this time…not about viral promotion of your service.So, marketing/touring expenses can take a backseat in such a situation

6. Reduce your own salary

Top guys(CEO,CTO,who’re usually the co-founders of a startup) are the ones who are least probable to ditch their own startup in crunch situation.Also, their salary is supposed to be highest as well.A 15-20% reduction in their salary can help saving one or two layoffs.

7.Don’t cut out on folk’s salaries

Offer them work higher than usual(say 2-3 hrs more) for the same salary/perks. As time is money so you get to save time(or money) this way. They would like to work a bit longer rather than going down on their current expenses/lifestyle.

8. Monetize more…

If your startup’s business model is largely based on advertising revenues and  that means,you have been maintaining a trade-off between money-visitors then try to monetize higher than usual.

Even a re-organisation of your ad placement may save you a folk’s salary(if you’re bringing respectable viewership).Mind you, ‘one folk saved’ is ‘one folk added’.

9. Evaluate options for unavoidable expenses

You may realise that shifting from ‘fixed cost servers’ to ‘Cloud computing based servers’(such as Amazon EC2) may save you one-third a folk’s salary.Look at VOIP.Its quality has increased significantly and it’s cost-effective as well.Similar options on other unavoidable expenses may save you few hundred dollars every month.

 

10. Fire your PR folks….they just can’t help you out at this moment

They may be good when you’ve plenty to spend but right now, they are just not required. So, get rid of them if you haven’t already done it.

 

11. Rent out your office space to some other startup or work on Shared basis

Renting additional office space or sharing office infrastructure can serve as a good idea to save up some money

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Hope, these tips will prove useful to all those who’re going through a tough financial crunch and may help save a few jobs if not many.

9 Comments

9 Comments

  1. Ben Waugh

    October 27, 2008 at 10:00 am

    Hi there,

    I looked over your blog and it looks really good. Do you ever do link exchanges on your blog roll? If you do, I’d like to exchange links with you.

    Let me know if you’re interested.

    Thanks..

  2. Barry Larry

    October 27, 2008 at 10:07 am

    What is the deal with the writing? There should be a space after periods and commas.

  3. ron G

    October 27, 2008 at 12:14 pm

    Hey great ideas. I would definitely advise putting layoffs as a last resort. Usually your employees have close relationships to clients and suppliers that you would have to rebuild, costing you business in the process.

    To add to points 4 & 5. There are plenty of online applications (sometimes free of charge!) that can help your employees work from home or have virtual meetings to cut down the costs of travel for you and your employees.

  4. Prashant Sharma

    October 27, 2008 at 9:30 pm

    @Barry
    Better elaborate your comment…

  5. Venkat

    November 2, 2008 at 12:42 am

    As an advisor to a number of start-ups which are up and swiming to exist,I consider trust as very important.A consultant or advisor is alwys effective and accomodative and is quite essential.Some Enterpreneurs think they are dispensable.Also the failure occurs because of non-sharing of info and some devious intentions of the budding enterpreuners.

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  8. Ashfame

    April 10, 2009 at 7:10 pm

    @Prashant
    You should use a space after periods and commas (as suggested by Barry).
    Eg:
    Use “Well, I did it. But don’t ask me how.” instead of “Well,I did it.But don’t ask me how.”

    • Prashant Sharma

      April 10, 2009 at 10:52 pm

      @barry @Ashfame
      Although i’ve done such minute(rather irrelevant) rectifications in this write-up, i’ve no intentions of doing the same for any other post….C’mon folks, am i writing articles for a newspaper or something…It’s a tech blog…format,punctuation takes a back seat when it comes to blogs….What matters is ‘Content’ and the ‘Point of View’….
      Njoy !

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