Almost every startup initially faces the problem of money.
Knowing where to spend and where not to is hard to figure out, especially for startups who are bootstrapping. There are numerous reasons why Startups fail and this could be due to hiring team members that are not suitable, not assessing to achieve the product-market fit, not doing the proper research while building the wrong product, etc.
However, there are a few things you can do to overcome these issues. Reducing burn rate means more work for your startup and you. If you can reduce the burnout without putting the breaks on growth, it’s a win-win! So, we have come up with few suggestions to manage your burn rate.
Chances are, you don’t need a full-time employee because you can accomplish the same tasks by hiring a freelancer on a need-basis. This option will help you save some additional money which you can invest somewhere else. Also you don’t need to provide him with office space and other allowances which a full-time employee may require. Freelancers are always looking to make money so there will be competition. You can get an even better offer because of it. Also you can renegotiate for every task which you can’t with a full-time employee.
There is no shortage of people who want to become entrepreneurs. Look out for people who are ready to contribute in your startup in exchange for learning and experience. Interview them before just hiring and always choose the one having skills you lack. Since, they are interns you can also ask them to learn something that would be of mutual benefit. You can have them perform tasks that would otherwise require employees. But don’t exploit them. Don’t make them do something that isn’t work-related.
You can save some money in exchange for services. You can provide some skill that is useful for another startup in return they can provide with something you need e.g. your skill set includes app development and you need designing, search for startups who are looking to get their apps developed, this way you both accomplish the tasks for no bucks spent.
Avoid glamour at all costs! Don’t get an office just because your startup would appear great in market. You can save that money to invest in some other integral resource. Because of technology you can get a lot of things done on internet from home. Get office space only if you need it. Otherwise you can do occasional meetings at cafes too. Of course, having an office increases team engagement and avoid repetition of tasks but you can achieve that by using remote learning tools. In case you really need to meet and discuss something you can gather at someone’s house and discuss.
You can learn almost everything on internet. There are tutorials for a lot of skills e.g SEO, Adobe illustrator etc. Always make time to learn an additional skill. You can save money for other expenses by learning something like graphic designing, website development or any service which your platform requires. Also, learning a new skill always can always come in handy. This doesn’t mean that have to stick your nose in everything going around. You can’t do everything simultaneously and it will exhaust you. The trick is to do something instead of what you do already.
Don’t spend on things that are of top quality when your requirement is met by another cheap option available. For Example: Buy a simple ball point instead of an expensive ink pen etc. Don’t buy something in bulk because you may need it six months from now on. Being frugal is one of the most important skill a startup founder needs to have.
The things mentioned above are useful for both bootstrapping and funded startups because most of the times things doesn’t go as you plan they would. Some sort of emergency money is always useful.