What’s the number one reason why startups fail? They run out of money. When you’re bootstrapping your business, cash is king. You need to make sure your runway extends as long as possible before the revenue starts rolling in.
Want to avoid running out of cash during your crucial first year? Then avoid spending money on these seven unnecessary expenses.
1. Office Space
Well, you’ve just decided to launch your own company and so you need that cool office space filled with hoverboards to prove your tech bona fides right? Wrong.
Office space is one of the biggest expenses that will burn right through your cash. Instead, check out a coworking space in your city that promotes networking and fosters an entrepreneurial community. If these coworking spaces are still too pricey for your budget, try enrolling in a virtual membership like this one offered by Washington, DC’s 1776 incubator. Some coworking spaces such as Chicago’s 1871 offer reduced price nights and weekend memberships, so you can work non-peak hours and save money.
Or sign up for free newsletters that will tell you what’s going on in the local startup scene, so you can stay in the know.
2. Custom Website
Unless your product or service requires an innovative website with never-before-seen features, chances are you can find an out-of-the-box solutions that will fit your needs.
Build a site inexpensively on a platform such as Squarespace or Shopify to get your minimal viable product up and running fast. Start off with these, then consider developing your custom site later--once you have market validation and more cash.
3. Marketing & Advertising
Before you pump money into driving traffic to your website or splashy advertising for your product, make sure your product is ready to scale. Did you already build a profitable business model? You don’t want to send traffic to a site that isn’t working or to a product that isn’t ready to be shipped.
Don’t spend a chunk of your budget on a marketing campaign if you’re unsure if it will convert any customers. Instead, start off by employing small tests targeted at different audience sets through a variety of marketing channels to see which gives you the best return for your spend.
You want your all of your marketing materials including your website and social media accounts to represent the best of you. This means the best creative and photography to boost those Facebook and Instagram likes. We get it. But beware of vanity metrics. Hiring a graphic designer for every newsletter and pitch deck or a photographer for new website and social media photos gets really expensive--and really fast.
And there’s no guarantee that these efforts will directly increase sales. Check out sites like Canva and Unsplash for modern marketing templates and images that you can use before you’re rolling in the dough. Your product or service should be able to speak for itself in the beginning.
Think twice before you decide to head to SXSW or a cross-country investor meeting. Can you start conversations off with initial Skype calls? What are the chances that your pitch will win over the investor? Is the conference a sales opportunity or simply networking?
Explore local networking events and start of by off by talking with local investors. Still itching to jump on that plane? Don’t forget to review your loyalty programs for points you can use for hotel stays or flights and follow these budget travel tips for entrepreneurs.
6. Team Outings
A strong team is an essential element of your startup’s success. As a leader, you recognize the importance of team building and making sure your employees are happy, but not at all costs.
Instead of expensive company retreats, fancy dinners and employee snacks and perks, get creative with ways to foster team bonding and rewarding your employees. Geek out together with over trivia or game night in your office with a potluck dinner or volunteer together.
7. Personal Expenses
As tempting as that ski trip to Whistler with your besties may be, remember that forgoing the short-term gratification will extend your business’s runway and increase your chances of success.
The lifestyle that you led while making beaucoup bucks in your corporate job isn’t sustainable. To watch out for your cashflow, review your monthly bank statements line by line. Are there monthly subscriptions to beauty boxes, doggie boxes, and organic food boxes that you can cut out? Do you really need that premium cable subscription and Netflix? Chances are you won’t miss out on all those things you accumulated.
Instead focus on developing your happiness on experiences and most of all the satisfaction from deferred gratification once your business takes off!
Good luck and let me know if you have other tips on how to save money while bootstrapping your business!