In order to grow or even function, startups need to spend money, however, spending and leaking are not the same things. The greatest difference here lies in the efficiency of the investment. Every time you pay more for something that can be done with less, you are putting yourself further away from the break-even point and diminish the chance that your business will make it. In order to avoid this, you need to get familiar with six most common ways in which startups are leaking money.
Canceling your landline
Try to record every single time you receive a phone call and look at the report at the end of the month. One of the things you might notice is that, when compared to your website’s chat box, your email or even IM/DM service on your social networks, you receive relatively few calls via phone. In other words, having a landline is an option you can simply do without. Sure, if the majority of your customers belongs to the baby boomer generation, this might not be a sound idea. In any other situation, however, just outright canceling your landline might be a good idea.
Paying bills in person
Paying bills in person costs you somewhere around $12 per bill. Considering the number of bills you pay on a monthly and yearly basis this may amount to a small fortune. Most business owners, unfortunately, accept this as the inevitable expense of doing business without stopping to consider the possibility of paying these bills online. In this way, you could reduce the cost of paying for a single bill to $1,50 only, which makes this move incredibly frugal.
The thing about marketing is that, in the past, it was nearly impossible to pinpoint its efficiency. Sure, you hire a marketing expert, let them work and experience a boost in sales, traffic and popularity. However, were you really able to tell which of the 10 techniques they used actually caused the increase? This is why John Wanamaker once said that although he knows that half of the money he spends on marketing gets wasted, he can never know which half.
Nowadays, in the era of digital marketing, such a thing is not necessarily true. For instance, when hiring SEO experts, you can insist on elaborate SEO reports on a regular basis, and thus be able to evaluate their efficiency. Even a complete digital marketing layman understands metrics like traffic, number of first-time visitors and conversion rate. In this way, you can stop spending money on areas that aren’t yielding you a decent ROI.
Not automating customer payments
In order to become reliable, customer payments need to be automated and organized into a subscription-like system. With present-day platforms and digital tools, this is fairly easy to achieve. In this way, if people forget to renew a subscription, even for a function they use every single day, you’ll automate this process so that it automatically renews. This will also mean that customers will need to cancel the subscription manually, which, on its own, might be enough to dissuade some people who are still on the fence when it comes to canceling.
Hiring unqualified people
Training people takes time and money and waiting until they acquire enough experience may cost you even more. In other words, hiring unqualified people is a clear money leak for your business, and one that can be avoided by setting just a bit harsher hiring criterion. Sure, this will diminish your talent pool or even cause more problems if you need to make an emergency hire, however, thinking about this in time is definitely a money-saving practice.
When it comes to web-hosting, you need to walk a thin line between free and too expensive. The first one may paint a bad image of your business, whereas high-end web hosting (although providing great ROI in the long run), may not be something you can afford. Luckily, the number of options out there is simply staggering, which should allow you to find a perfect choice, provided that you’re willing to invest a fair amount of research.
Apart from these six solutions, there are other ways to save money. Still, what makes the above-listed suggestion unique is the fact that it doesn’t diminish the efficiency of your research. Eliminating same-day delivery, lowering the quality of your products by skimming on supplies and laying people off directly affect your appeal and productivity. With the above-listed six examples, you get to save some money while not having to face a single significant downside.