#WisdomWednesday: 5 ways to stretch your company’s cash
Entrepreneurs face a lot of different challenges, but cash flow seems to be one of the permanent ones. Especially in this pandemic year, it’s not always easy to make budgetary decisions. Have no fear: this #WisdomWednesday we’ve lined up some smart ways for startups to cut costs and keep growing!
Thing big with OKRs
Let’s start with the big picture. OKR (Objectives & Key Results) is a framework used by Google and other big companies to ensure their alignment with essential goals. OKRs allow you to track collaboration and outcomes and keep everyone onboard and engaged. They can be implemented using spreadsheets or OKR software. OKRs drive the bigger vision that other goal-setting methods like KPIs can help serve.
You can adapt OKRs to any aspect of your business to set measurable goals and track results. To give an example, let’s say you want to improve sales and motivate your sales team to get their numbers up. Your measurable goal could be improving the Monthly Recurring Revenue (MRR) of your product. Your sales team could set a goal of achieving €150K in the first quarter of 2021. You could break this down into the following goals for the third quarter of 2020:
- Increase customer retention by 30 percent
- Increase monthly subscriptions by 10 percent
- Reduce monthly churn rate from 2 percent to 1 percent
The OKR gives you a set of specific targets to achieve and dates to achieve them by. Having measurable key results makes it easy to see if you’ve achieved your OKR by the goal date, and it’s clear who needs to do what to make it happen.
Don’t skimp on going remote
We’ve all been part of the big working-from-home experiment this year, and there are plenty of reasons to keep going. Working remotely is an easy and obvious way to cut your company costs, saving your team money on commuting, travel time, and all the expenses that come with running an office.
A recent study (June 2020) conducted by Tilburg University shows that working from home pays off for employees. The university surveyed over 5,000 respondents from all over Europe, and the resounding consensus was that remote working fits in better with their social preferences, lets them work more efficiently and gives them more control over their working day. If there is a silver lining to come out of the corona crisis, it’s that a lot of companies and startups were suddenly forced to work (mainly) remotely. It’s unfortunate that it had to happen this way, but sometimes it takes a crisis to create large-scale change. Several big companies, including Google, are favouring remote work until at least the summer of 2021.
The good thing is we have the tech these days to make it work! From project management software to teleconferencing tools, technology helps keep your team together. So if your company has been able to function well during lockdown, it could be an idea to keep working remotely long term. If the success of startups like Gitlab or Hotjar who use all-remote models are any indication, going remote-first is totally feasible.
Still prefer to get your team together in-person? Consider using a co-working instead of an expensive office with big fixed costs. At Start it @KBC startups get office space to use completely free of charge!
Outsource & leverage the gig economy
Another easy way to cut back without endangering your growth is by outsourcing. Often there’s not enough continuous work in certain areas for a startup to recruit a permanent profile, and that’s where the gig economy offers a lot of advantages. Once you start to scale and expand certain processes or parts of your business, it can make sense to take on a dedicated staff member who is committed long-term. In the meantime, freelancers can be deployed quickly and involve fewer net costs than permanent profiles since you don’t have to offer a complete employment package. There’s plenty of talent out there working independently and ready to jump in and strengthen your team for however long you need.
Of course hiring a freelancer who doesn’t deliver what you need can end up costing you more. Pro tip: don’t take shortcuts here by taking on whoever’s around and eager for the job on Fiverr or Upwork. Instead, harness the power of the network to find someone who comes highly recommended by people you trust. Just as with permanent employees, making concrete agreements is key. Make sure each person holds up their end of the deal by getting it all down on paper. Working with a freelancer may be a quick solution, but take the time to do it right and make sure both parties are covered.
Squeeze your marketing expertise
If you have a co-founder or founding team member with marketing experience, all the better. Put it to work to start building your brand from the beginning through blogs, marketing emails and social media. Once you’ve built up an online presence that draws readers in, focus on honing your media relations expertise: learn to write a press release, pitch to journalists and sharpen your interview skills. Make storytelling and marketing part of your long-term strategy to create the visibility you need to grow. Then once you get big enough, you can hire marketing staff to take it from there.
If you need some support in this area, it could be a great idea to partner with another company and split the expenses. You can pool your talent and resources to work together on joint campaigns and events, increasing your reach while reducing marketing costs. A great example of this collaboration is Give A Day and Dinnergift’s campaign to support the restaurant industry with the biggest neighbourhood bistro!
Pay up front to save money
Ever hear the old saying about how being poor is expensive? That’s because the surcharges from buying things in small quantities add up. Paying up front and in bulk can end up saving you a lot of money. Buying office supplies in large quantities, splurging on longer-term software licenses and other bigger purchases can go a long way in bringing down total expenditures. So for the basic things you rely on to keep things running as a startup, it can be a good idea to put up some more funds in advance and save money in the long term.
Of course you have to keep it lean, so take the time to research your big purchases before you commit. Compare prices, try out different products, and think through how you will use various items on a daily basis. Buy from trusted suppliers and build up a relationship with them to benefit from loyalty discounts. The bottom line: spend wisely and get further!
Have another idea to cut costs that also deserves a place on our blog? Let us know and we might feature you.