Start a Business on a Bare-Bones Budget With These 3 Lean Tips
There is a lot of talk lately about the rise in startups and venture capital returning to high levels. With all that capital there are also unfortunately common stories of overzealous spending on things that most startups really don’t need.
You may feel envious if you’re bootstrapping while reading about the large venture-capital rounds of others, but as an entrepreneur who bootstrapped my way to success with my brother Adam, I’m here to tell you that you shouldn’t let stories of big-budget startups scare you away from staying lean.
Here are three of my best tips for keeping your startup on a bare-bones budget.
1. Choose your garage.
Don’t waste money on an office. Even a shared office space can be more than the average startup can afford. When I started my first brick-and-mortar business with my brother Adam, we used to sleep on the couch at the business. We were pretty much living out of the back office and showering at our mom’s house to save money on rent for both an apartment and an office.
Every dime went into the business and we recognized up front that one of our biggest expenses was rent. Don’t make the mistake of committing yourself to a lease. Try to live as lean as possible and combine your living and working space to minimize your overhead costs.
2. Staff is overrated.
While hiring out work is very important to avoid burnout and effectively scale your business, that doesn’t mean actually hiring staff. You should outsource everything you can’t do yourself.
Most staff is totally unaffordable and actually overrated as a startup. Find people who are willing to work on a freelance basis so you’re only paying for the projects you truly need vs. someone’s time, all the time. Full-time staff also has tons of halo costs such as certain legally mandatory benefits and health-care costs, as well as employee payroll and tax costs.
Don’t hire staff -- it’ll sink you fast.
3. Reduce, reuse and recycle.
You do not need the latest and greatest anything as a startup. Don’t waste money on a new iPhone 6, office furniture, supplies or any other new electronics. Penny-pinch every corner from finding necessary furniture at second-hand stores or garage sales, repairing existing electronics to keep them in service and basically finding a way to reuse and recycle every single thing you touch.
Paper? Print on both sides. Pens? Buy a batch in bulk or use your own collection you’ve amassed from trade shows and bank-teller windows. It sounds neurotic but literally every dollar you save is a dollar you can put in your business now, so you can scale it, sell it and enjoy your lifestyle later.
Be a bottom-line person and keep tight tabs on your budget by reusing everything.
Do you have any other lean startup tips? Share them in the comments section below.
Matthew Toren is a serial entrepreneur, mentor, investor and co-founder of YoungEntrepreneur.com. He is co-author, with his brother Adam, of Kidpreneurs and Small Business, BIG Vision: Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right (Wiley). He's based in Vancouver, B.C.