Runway is one of the scariest topics for entrepreneurs. Once you reach the point where your company is going to be out of money, you'll think about all the expenses you could have cut. One of the best ways to prevent this is by running lean. While some entrepreneurs take this to the extreme, there are simple ways you can save cash and still get amazing results. Here are some of the easiest ways to do it.
1. Substitute an office for a co-working space
Co-working spaces are becoming popular all over the world. The set up is ideal for entrepreneurs, who want to be able to work on their companies but don't have the money to afford an office. Besides cheaper rent, one of the benefits of a shared workplace is you get to bounce ideas off of other people. In fact, there are several co-working spaces built just for entrepreneurs. That way, you can pull all nighters with other companies, and ask others for advice who've been in your situation.
One of the most used excuses for not using a co-working spaces is that it's not an ideal place to meet with investors or clients. While this may be true for some, most shared workplaces have conference rooms that you can use for important meetings. In addition, you'll find that many spaces you come across will be much more quiet than you'd expect.
The beauty of these shared workplaces growing in number is that you can find the one that is ideal for your company. Visit a variety of co-working spaces before making a decision. Factors such as price, location, culture, and resources should all play a factor. Until your company gets to be too big, these spaces can be perfect for quite a while. You may not have an entire floor to yourself, but you'll save a ton of money and probably have more fun.
2. Allow team members to be part time
Recruiting a great team is always difficult. This is especially true for your technical talent, because the demand is so high. Until you've raised a good amount of funding, you most likely will not be able to pay a seasoned CTO to come on full-time. Instead, a great way to solve the technical problem is by allowing and even recruiting people who can only commit to part-time. You may get less work hours, but you'll have a higher chance of paying in part or in complete equity. It's much easier for someone to take strict equity when they have another income source coming in.
Also, this is a great interview process. By having people work part-time for equity in your company, when you get to the point where you can pay them you'll know if they're a good fit. Sometimes, the best products your company will produce won't take the most time. That's why at companies like Google they give employees free time to work on fun projects. Only having a team member for 20 hours a week may not be ideal, but you'd be amazed at what people can build with only that time commitment.
3. Minimize expensive dinners
Taking people out to lunches or dinners can rack up your costs. The worst part is that in most cases you don't know how much you're going to pay. Some clients or recruits will be considerate that you're a startup and not go overboard. Others will not. To avoid this, try substituting lunches and dinners for coffee when appropriate. It's much harder for someone to overspend your budget at a Starbucks than it is at a steakhouse.
Also, grabbing coffee can be as intimate as a dinner or lunch. No one will rush you to leave, and many times you'll actually be able to get more time than if you went out to eat. You'll also be much better about budgeting for those meetings because you can assume coffee prices won't vary much. Are there times where a nice dinner may be needed? Sure. But if you can minimize those events it will safe you a ton of money in the long run.