These sound pretty simple, but they do certainly add up! If you are bootstrapping and are running out of cash or newly laid off, these apply equally to you all.
If your clients and customers are having issues, then you will start having issues as well with cash flow. Everything flows downhill…
Here are a few easy suggestions for cutting your expenses. These are mostly targeted at early stage startups; bootstrapped, sidestartups, those with friends and family money and angel investments.
Stop buying coffee ($4.00 a cup can break the bank)
This definitely applies to me! I often have 3-6 meetings per day at coffee shops around town. If I were to buy coffee at each place it would get extremely expensive. What I tend to do is group my meetings at one location, that way I am only buying at most one cup of coffee. (it also saves a ton of time as I am not traveling between two places)
If possible, make and bring your own lunch and try not to eat out if you don’t have to. Food and beverage costs add up quickly, try to eliminate them if you can.
Do you really need office space
Probably not. Especially if you have a small team. Can you work out of your house or even sublet from a larger office? I often recommend places such as GiraffeLabs and StartPad here in Seattle. I am sure there is no shortage of co-working spaces is your town as well.
Coffee shops aren’t a bad idea. Though, I would suggest getting tea or a drip coffee over that $4 latte.
Eliminate all unnecessary expenses
If you don’t use it, lose it! Get a full list of your bills and go through them one-by-one and start cutting. Anything you don’t use regularly needs to be cut. You should also run a value calculation for each expense to determine if the value they provide is greater than the cost you are paying. This applies to the different aspects of your phone, cable, internet, services, netflix bills, etc.
You will be surprised by how much you don’t need. You may even be surprised by how much you didn’t know you were spending. Make sure you aren’t be nickel and dimed. They add up real quick.
Renegotiate all contracts
For those contracts you absolutely can’t kill, be sure to call your provider and renegotiate the contract. Tell them you are bootstrapping (or recently laid off) and that you need to chat about better rates, lower fees, decreased interest rates, etc. The list can go on and on. Most will be happy to work with you. After all, a customer is better than no customer at all!
Go open source
If your cash position is an issue, are you aren’t already using open-source software then you need to. Not only will you save money, but you will also be able to use the large contractor base of individuals that have developed around each open-source solution.
Hire contractors (not full time employees)
Keep your costs down by using contractors when you need them? Do you really need to hire a designer full-time? Will you have enough business to keep that person busy at ~80 of their capacity? If not, then you definitely shouldn’t hire anyone. That being said, you can hire an excellent contractor to step in as you need them.
Importantly, it will be vital to develop a long term relationship with one to three vendors so that they have a good understanding of your needs, your product, and your vision! It will also give you the coverage you need should one or two contractors not be available to meet your deadlines.
Keep on top of Account Receivables
This obviously isn’t a way to save money, and is important regardless of the economy and your cash position. It is just a reminder to ensure that your clients are paying you on time. In tough times cash is king, and this is even more true when banks are lending as actively as before.
What are the others?
About nathan kaiser
We have a huge office with too much space and we sub-lease it out to contractors. Been the best decision for us, we are covering our entire rent through sub-leasing.
- Derek
a lot of these go without saying but have to be said and resaid (as i begrudgingly sip my coffee). Thanks for the great post
Hi Greg, I couldn’t agree more. Sometimes repetition is key, though that is mostly true for me. Interestingly, I wrote this post while drinking a Mocha. “My hypocrisy knows no bounds!”
And for those smallish teams that are just large enough to be in an office together…
Salary cutbacks – better to stay working on your favorite project then it would be to have to find a new favorite.
Team lunches for those days when bringing food from home isn’t appealing (cheaper to pitch in $2 on pizza then going out to eat).
Coffee at the office – and invite people to your office instead of a coffee shop
4 day work weeks – if the team is only working four days a week the heat, lighting, etc does not need to be on that 5th day (this is more effective for larger teams, but has a small benefit for smaller teams). If you are small enough to be sharing space, see if you can get a three or four day a week co-working agreement.
Lastly – Focus on your business – don’t spend time/money on things that can really be done by someone else for cheaper, your team should only be doing things that relate directly to what you are producing.