Some companies strive towards lofty altruistic goals, being charitable in nature or dedicated to solving the major problems that threaten humanity and the world we live in. Others are built around enjoyment, with the founders delighting in what they do and merely wanting to skate by without needing to work other jobs to support their passions. But money always matters.
This is because every business needs robust finances to remain in operation, even if the owner has no plan to grow it. You may not care too much for money (money can’t buy you love, after all), but it’s necessary organisational sustenance: fuel for the fire of industry. And this is particularly true when it comes to startups, as they’re still trying to figure out the basics.
Barring personal savings, startups don’t get to fall back on financial reserves. They need to simultaneously develop in a forward-thinking way and be exceptionally careful to avoid spending too much and running aground. In this piece, we’re going to look at some tips for how startups can save money during these peculiar pandemic-threatened times. Let’s get started.
Keep travel costs at a minimum
Circumstances in 2020 have already conspired to reduce travel costs quite significantly, with in-person events of all kinds being cancelled or moved online due to the ever-looming threat of COVID-19. No longer are startup founders racing around seeking to promote their brands and engage in valuable networking: they’re still seeking to engage with experts, book speeches to display their knowledge, and negotiate with suppliers, but only through virtual means.
That said, business travel costs haven’t been eliminated entirely. Not only are there still companies considered essential, but there are also service businesses that function through delivery, collection, or in-person visits — and those outgoing businesses have been allowed to remain in operation provided they adopt all practical safety measures.
And then there are those tech startup founders who need to showcase their technologies. It isn’t always viable to demonstrate something via an unreliable video feed, and it’s hardly unknown for such a founder to pitch to government agencies with complex approval processes. In short, there are various cases in which it’s still both justified and allowed for business travel to occur.
If you’re running a startup, you should avoid business travel wherever possible — but when you can’t (when the case for travel is too strong), you need to find ways to keep the costs down. This is important now, but it’s going to get more important: even if the pandemic is brought to an end, travel cost inflation may remain in place as providers struggle to get back to financial stability. Consider the following tips for cutting costs:
- Planes: international conferences are still essential for some industries, but casual booking can result in massively-inflated prices. Skyscanner is very effective at picking out the best and cheapest flight combinations (though do keep in mind the dangers inherent to air travel, and the various national laws in effect).
- Cars: if you’re tasking staff members with driving long distances (to deliver food, perhaps, or provide in-home services such as plumbing) and covering the fuel costs, giving them fuel cards like those detailed here will allow you to track fuel spend and optimise journey planning.
- Trains: the UK rail system is finicky at the best of times, with it often being cheaper to get two connecting (or overlapping) singles than it is to get just one ticket. Trainline’s split-ticket feature gives you the chance to find those deals by using the regular booking app. And provided everyone wears a mask and has a compelling reason to travel, a train journey — even of extended duration — can be quite safe.
Use flexible working arrangements
The practice of using dedicated office space has taken a huge hit this year, with the option actually being taken away for long stretches of time by lockdown restrictions (for most companies, at least: those with essential status have been allowed to proceed despite the risk). Companies have only been able to continue through remote working (part of a greater move towards flexibility), which makes it possible to have a team of employees working from home.
But remote working is far from a perfect system, even now that months have passed and people have become used to it. It leaves teams disconnected in frustrating ways and makes it so much harder to maintain company morale. Now that vaccines are getting results and entering mass production, we can see an end to the pandemic, and we need to think about the long term.
What will happen with remote working? Will it stay the standard or be returned to its position as a backup option? Well, the most likely result is that companies remain highly flexible, allowing employees to work remotely very often but also taking advantage of shared working spaces to provide classic office experiences without spending heavily on renting exclusive offices.
The idea for shared working spaces is simple: you pay a small amount each month and get access to a large space used by various other startups and freelancers. If you have client meetings, you can hold them there, renting entire rooms when you need them. This massively cuts the cost of running a small business, allowing you to invest in your sales pipeline. And while there will always be some risk, you can choose to work in spaces run by companies with notable commitments to workplace safety, ensuring that that risk is suitably minimized.
Partner with other startups
When a business is just starting out, the founders are eager to prove themselves, and will be more willing to provide free trials and samples to demonstrate what they bring to the table. Before they can start earning money, they need to get some attention and build up their portfolios. You can expand on this idea by partnering with compatible startups.
Here’s the core concept: if you do marketing, and another startup does graphic design, you can arrange an exchange whereby you market their brand and they design some materials for yours. That way you don’t need to pay anything, and you both get to benefit. If it’s possible to partner with a local company, you should take that approach, as it will serve to bolster the local business community and help you deal with regional challenges.
Note that you don’t need to meet with other business owners if you don’t want to (perhaps you’d rather avoid the risk). You can simply arrange everything over the internet, contacting them through whichever means make the most sense (social media, email, etc.) and collaborating using business software. You also get to decide how long the partnerships last. If they have great potential, seek to turn them into long-term arrangements.
By working these tips into your financial strategy, you can significantly cut the cost of running your startup, improving your stability and making it easier to grow.