Money Saving Tips for Entrepreneurs (Cash is King)
Contrary to popular opinion in Bollywood, I think that Cash is King. Singh is just bling.
This post looks at ways in which start-ups in India can conserve their cash and find ways to save money – highly relevant in today’s context where funding is slow and growth expectations might not be playing out as expected.
Thrift and kanjoosi are going to get your start-up far, so start immediately. Here is what has worked for us at iTrust.in. If you have suggestions on how you are successfully cutting your costs and expenses, do share your ideas in the comments section.
Office space
- Get free office space: Ask your relatives, friends, school/university if they can give you free space. This will help reduce your office rental expenses. Instead of buying new furniture, use whatever old pieces you can get from anywhere. Why take on the capex of investing in things that will add very little value to the short-term future of your venture
- If you do open your own office, don’t hire some fancy architect to design it if your neighborhood carpenter can do the trick
- Do up the office frugally – don’t get false ceilings, buy reject fittings and furniture, buy cheap flooring instead of more expensive carpet which costs higher to maintain, use more glass rather than wooden partitions
Business travel
- Stay with friends/relatives when traveling for work. If you must stay in a hotel, look for cheap options that are close to your meeting locations. Share rooms with your traveling colleagues
- Use airmiles if you have any
- Take afternoon flights, they are cheaper
- If you can get a hotel industry association discount card through some friend/family, get it. You can then get discounts at participating hotels/restaurants. Will come in handy when you have to entertain clients/partners
Running Your Office
- Watch your utility bills – switch off the lights/AC/fans etc, don’t leave your computers running overnight
- Print double sided and in economode with lower tones to save toner; use cheaper quality paper
- Rent your non-critical office equipment like ACs, photocopiers, coffee machine
- Install an electric hand dryer in your toilet to save on more expensive paper towels – you will be surprised how expensive the latter can get
- Watch your stationery costs – take free pens/writing pads from any hotel, conference, vendor you get offers from (but don’t steal!)
- Recycle scrap paper; keep the pins, rubber bands and clips that you get in the mail
- Negotiate with each vendor – even a 5% saving from your suppliers can leads to big amounts at year end
- Outsource certain services so you don’t have to increase your headcount – HR, Company Secretary, basic book keeping for your accounts
IT
- Buy cheap PCs – you don’t need the branded Dell or HP desktops. If buying laptops, see if you can get good deals around holiday seasons or promos. Don’t fall for buying expensive warranties if you are getting a manufacturers warranty at the time of purchase
- Install free open source operating system (like Ubuntu) and an office suite of products (like Star Office) or use some cloud computing software. Why pay for an expensive software license for each machine when you can get decent functionality from free sofware
- Use Skype or another VOIP service (TringMe) – why pay for expensive long distance calls
- Get a deal from your telephone provider for your cell phones – corporate deals are cheaper for both voice and sms
- If you have a land line, keep your ISD and STD locked
Finance
- Maintain a budget and compare your actually profit and loss account to how you have been performing against your budget
- Go after the highest cost items where the bulk of your costs might be – see what can be reduced, sometimes it might not be worth losing too much sleep over the smaller costs. Don’t be penny wise and pound foolish
- Negotiate with your bank to give your better rates on your FDs. Threaten to walk away from them if they charge you fees or don’t give you good rates
- Don’t overspend on your credit cards or incur overdrafts
- Stretch your payments out to your suppliers, unless they call you or send in the goons, no harm if they can provide you with some working capital to fund your business
- Use food vouchers to give to your employees, your employees can get a tax saving, and accordingly you can give them more after-tax income even though you might be paying them a lower salary
Remember, a penny saved is a penny earned. I know of no start-up that became successful by indiscriminately spending its valuable cash. So, get frugal asap!
If you have any questions or comments please email them to startup@iTrust.in.
The author is a co-founder of a financial services start-up, www.iTrust.in.
pic credit
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good info…cash is certainly valuable for any entrepreneur specially at early stages
Somewhere, i read Don’t be penny wise and pound foolish.
I wonder why somebody would fly in afternoon, to save cash, rather than, he should be traveling Sleeper class in train, to save real cash!
Is air-travel a norm here?
You can reach anywhere by train spending equivalent to expense incurred in to & fro travel from city to airport!
@Govind, i think you got the point…which is about using cheaper alternatives….in your example the equivalent wouldn’t be to travel in AC sleeper, but maybe even a cheaper class. of course, you need to look at whether from a time perspective you can afford the slower journey etc.
And one more thing don’t often fall ill, doctor will eat up more money to help you recuperate with medicine outlay.
Negotiate with phone company for a zero rental plan.
Club all phones (including residence phones) in one centrex so that all employees can talk to each other for free.
Call up phone company and ask them for discounts on call usage.
yeah …… but meanwhile also ensure that ur product /service continues to add real value to ur customer
Kartik, Gobind If time is money dont you think both the options .. travelling during the day (wasting working hours) and taking the train (wasting even more hours !!) are bad options?
It depends on multiple factors. If you travelling from bangalore to chennai or the other way round, a night train is the best option than a morning/night flight. You need to know what is important. What karthik meant is use try cheaper modes of transport where ever possible.
I do agree with Kartik on using Skype…..its very useful!
but sometimes its a pain and you can’t tell if people have accepted your request or not when you try and add them.
The recipient has to be pretty tech savvy as well.
Skype has a service called “skypeout” through which you can call US cellphones for as low as 2 cents a minute. You can buy skype credit online through a credit card and can call almost all countries’ cellphones and landlines. Not just skype users. Do look it up.
I would say, don’t look for office space as long as you can avoid it. Just work from your home. Saves on the fuel costs also!
Also regarding vendors, after initial shopping around, just stick with one. Relationships are more important than getting the cheapest price.
And I would disagree with delaying the payments. If you are usually on time with payments, you would be able to leverage that much more when the crunch hits you.
For a venture where online presence is not a necessity but required, you can use google apps and build the site using their templates.
You can also use google docs for file sharing etc, it will save you cost on internet bandwidth if using a limited bandwidth/download plan.
Try and get (customers, vendors, colleagues) all in online chat as compared to phone. On phone, you will get limited free calls and after that calls will be charged, so why not use chat as much as you can and use phone when it is very necessary.
When traveling, schedule your appointments as such that you can use overnight train to reach and return. When traveling to another city, try and get as many meetings as possible and commute using auto’s (no taxi’s here) autos are equally good as in any case traffic around any city in India is not good and average speed is 30Kms an hour.
If you do not have any relative or friend in a city, try and book youth hostels. They have excellent accommodation and at good rates with good locations.
For outsourcing your work, outsource it to start-ups as they need business and you want good rates. Start-ups are not generally inexperienced companies, they are the product of experienced and visionary professionals, so you can expect good work at less rates.
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I think one thing to bear in mind is not to compromise on essential comfort so such an extent that it actually reduces your productivity.
Gautam Kshatriya
gautam.kshatriya@moneyvidya.com
http://www.moneyvidya.com
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[...] Recommended Read: Money Saving Tips for Entrepreneurs [...]
This oneliner from Paul Graham is one of my favourite quotes regarding startup and money -
“When and if you get an infusion of real money from investors, what should you do with it? Not spend it, that’s what. ”
: simply put don’t spend it
-prashant
ref : http://www.paulgraham.com/start.html