Every successful business is built on solid finances. But in the early days, the upfront costs to startups can be very restrictive and prevent you from growing at the rate you expected or wanted to. So, to help you gain tighter control of your purse strings and funnel more of your hard-earned income towards making a profit, you need to find ways to cut costs.
Here are 10 ways that we have seen to be successfully used by startups and entrepreneurs to make their businesses more efficient.
1. Create a customer loyalty program
Modern customers have almost limitless access to businesses. And that brings high expectations for a high-quality customer experience. Keep customers happy, and they’ll keep coming back. What’s more, they’ll spread the good news for you and introduce further business. A customer loyalty program that rewards clients with something of value is a great way to give a little back and keep your customers happy.
Acquiring customers costs up to 5x more than selling to existing customers. And an increase of just 5% on your customer retention rate can increase profits by between 25-95%. Customer loyalty schemes such as getting your 10th coffee free are not a new concept – you just need to work out what it is that will keep your customers onside and provide greater ROI. Get it right and you’ll increase revenue while cutting down on marketing and sales spend.
2. Form strategic partnerships
Startups generally have low marketing budgets. But that shouldn’t mean they go unnoticed. One way of ensuring you make a name for yourself in your market and align yourself with other businesses that complement yours, is to form strategic partnerships. Strategic partnerships help establish your business and enhance the reputation of both parties through co-promotion. By partnering with other businesses in and around your industry, you will grow your network and increase your exposure to potential clients and other partners.
3. Practice guerrilla marketing
Guerrilla marketing suits the entrepreneurial mindset to a tee. It’s about using in-your-face advertising to get noticed and be remembered via unconventional means. The only limit is creativity. For online guerrilla marketing, you don’t even need to have the technical skills to implement your idea. By forming strategic partnerships with freelance creatives, you can get them to help turn your idea into content that might go viral. Guerrilla marketing is cheap and can be done using social media sites such as TikTok where anything that grabs attention has the potential to fly for a B2C startup, or LinkedIn that is more tamed but has the enterprise ear for a B2B startup.
4. Get to know your customers
Speak to your customers. Find out what motivates them and why they buy. Not only will this make them feel valued, it will also make your business decisions more accurate. There is no point in spending time and resources on offers or extensions your clients don’t want.
Customer engagement is key to perfecting your product offering. Again, you don’t need to carry out the work yourself – after all, you’re very busy.
Instead, outstaff the customer engagement and product research process to a specialist company. You may face an upfront cost, but will help you reduce ongoing costs by giving you important data to help you spend more efficiently.
5. Buy used equipment
When businesses fail or grow, their old equipment becomes surplus to requirements. Provided it’s in good condition and is up to the job, you can make major savings by purchasing it from them or from auction sites. But always think twice: do you really need that printer with a fax machine, copier and scanner? Or are there better alternatives such as going green and using digital tools for these purposes?
6. Negotiate with vendors
Successful negotiation requires confidence and an in-depth knowledge of your business needs. Everybody is open to negotiation if there is something in it for them. When your lease comes up, negotiate with your landlord. They may well be prepared to offer you a discounted rate rather than lose your business and face the cost and uncertainty of finding a new tenant.
Buy in bulk and don’t be afraid to ask for an extra discount. If you’re going to be a regular customer, the arrangement could suit both parties. Remember – when you’re the customer, vendors value your business and want to retain it.
7. Barter with vendors and agencies
In a similar way to negotiating and forming strategic partnerships, bartering is a way of boosting your network and finding innovative ways that you can work together to the benefit of both parties. Let’s imagine your designer doesn't have much work for the next 3-6 months. Talk to your peers or other startups. They may offer you their devops as a consultant in exchange for some design work during that period while you scale your database infrastructure.
8. Use open source software
Make open source your default choice for point-of-sale software, accounting and bookkeeping software and others. Open source software will be cheaper – sometimes even free – and is often just as effective.
If your software needs can’t be met by open source software, it’s time to whip out those bartering and negotiating skills once again. This is another time when outstaffing can make sure you utilize the best talent to fulfil your requirements no matter where they are in the world.
9. Embrace remote work and a fully distributed team
Employees are expensive. Aside from their wages, there are many additional costs that rack up quickly and eat into your profits. Distributed teams of outstaffed workers are highly-skilled and dedicated to your business but come with the added benefit that you don’t bear the employee costs. A “remote team” culture allows you to hire the best talent possible no matter where they are.
With a remote team you save on all the costs associated with premises. No rent, no gas, no electricity. Connectivity is no longer an issue, and there is nothing to stop you meeting in person when required.
10. Outstaff: grow your engineering team in the most efficient way
Outstaffing is the future of work. It is particularly useful for startups looking to keep a tight rein on spending while having access to the best talent out there. Business efficiency begins with being frugal with your money and ambitious with your offering. Outstaffing combines the two in perfect synergy allowing you to grow rapidly without running the risk of costs getting out of hand.
Outstaffing breaks down barriers, cuts costs and increases efficiency by leveraging the best talent on the planet and giving you dedicated teams who are fully focused on your project - no matter how niche it might be. That’s why US companies are increasingly outstaffing to Eastern Europe, in particular Ukraine, where there is a rising tech scene following massive investment in the industry.
About the company
Agile Fuel recruits and supports high-quality dedicated engineering teams to support startups in operating efficiently. Distributed teams work out of offices in Ukraine in teams that are uniquely tailored to meet each client's specific requirements. The agency is stack-agnostic and focuses on finding the right people for each client however commonplace or esoteric they may be. By taking care of recruiting, HR and administration, Agile Fuel allows its clients to focus on direct engineering management and preserving their team culture.
Get in touch today to make your startup more efficient.