When you’re in startup mode, there are so many things running through your mind. You need equipment, marketing, a website, employees, etc. With more money being pumped into startups, it’s easy to see this never-ending cash flow as a way to get all of those things at once. According to CoinDesk, March of 2018 had already seen more capital raised than all of 2017.
With the advent of the internet and social media new businesses are starting daily, and they are even having an easier time hitting the billion-dollar mark valuation mark (although this is still only achieved by a relatively small number of startups). Investors are waiting for the next Zuckerberg to come along, and they’re willing to spend to find him or her. With all this readily available cash, a startup is in a unique situation. They are able to attract massive amounts of investment into their business, without always having to prove they have the discipline and processes in place required to build sustainable success.
Here are some easy tips to stop hemorrhaging money and build for the future:
Create a budget.
I’m sure you already have a budget in mind and have an idea of where the money will be allocated, but you really should create something close to concrete. Have a budget in mind, map out the details and stick to it. As a startup without capital, entrepreneurs must rely on ingenuity. Just because you have the cash flow does not mean you should ditch the MacGyver attitude.
Consider consultants instead employees for your startup
Consultants are a great way to get the results without the extra cash. Need to work on branding? Need a website? Want someone to manage the books? Hire a consultant and save yourself the need for Worker’s Comp Insurance, sick days, vacation time, etc. New hires can cost your company an average of $5,000 per hire. Consultants cost less overall and can provide stellar results for your business.
Don’t outsource too soon
I know what you’re thinking, “Ashley you literally just told me to outsource.” I know I did. But there a lot of things you can do for yourself before you outsource. Do you have some experience in marketing and it doesn’t drain your life? Try it yourself before outsourcing. Need someone to handle your schedule? Use Google Calendar to set appointment times (yes, you can email your availability out to clients via Google Calendar). If you’re capable of doing it and it doesn’t add frustration to your life, do it yourself until you’re ready to outsource.
This is a common problem with startups. As new entrepreneurs, you want to undercharge so you can generate sales. You want that Sally Field “you like me” moment. So you undercharge to drive up sales and build your customer base. The problem is that undercharging leaves you less than profitable and clients are less likely to spend again if you up the pricing drastically. Undercharging will have you playing financial catch-up for years to come and no one wants that.
Avoiding these pitfalls can save your business. Adopting these simple business practices can have you profitable for years to come.