Its estimated that about 150 companies file for commercial bankruptcy each day according to the American Bankruptcy Institute. Companies of all sizes fail due to lack of or misuse of capital. We hear stories all the time about new tech companies failing even after raising huge funding rounds. These companies often fail to turn a profit and most likely took a bigger bite than they could chew.
Because of this we are seeing new startups use the lean startup methodology. The basic premise being: what's the cheapest and quickest way we can get to market with our minimum viable product. If you're just starting out here are three ways to keep your startup lean and mean.
1. Utilize the Share Economy
Your team will have their core competencies and you should delegate any work you can to your core team first. Then you'll want to look for outside help. Whether its software development, design, marketing, financial consulting, or even just advice you should look to the share economy. Platforms like Upwork and Fiverr give you access to hundreds of thousands of talented freelancers across the globe.
Instead of paying a design team in the United States a couple thousand dollars to design your home page, you could get by with a couple hundred dollars for the same quality of work using this outsourced talent. Freelancer's carry dramatically less overhead than dev shops and other service providers. Because of this they'll typically be way less expensive.
Some freelancer's even allow you to pay a fixed price upon completion. I highly recommend using this strategy since it ensures you get what you pay for. Be transparent and upfront with your freelancer and I guarantee you won't be disappointed with their work.
2. Optimize Your Payments
The world of payments is a tricky one. The quicker you're able to find a proper payments solution for your business the better. There are plenty of payment platforms out there that offer a wide variety of value-added features. Start by looking at the most popular payment solutions and decide what core features your business will need to utilize.
Regardless if you're building a SaaS product or plan on selling online, you should definitely look to utilize a completely digital payment solution. A huge plus is that you won't have to worry about sifting through all your paperwork when it comes to any basic accounting tasks. Electronic payment systems are great for keeping all your documents in one place. Some platform's even offer features such as tax filing and preparation, white-labeled support, and extensive reporting. As a start-up, utilizing these features will save you tons of time and money when it comes to your finances.
3. Co-Working Space
I know its fun working out of the garage, but it comes time in every start-ups life where they'll need to find some legitimate office space. From a cost perspective, co-working spaces are a great way to get the most bang for your buck. Typically these space's have all the amenities of a regular office and allow you and your team to essentially pay-per-use. Companies like WeWork offer a tiered pricing structure where you can basically pick and choose your amenities as you need them.
Another great aspect about a co-working space is that you're able to access a great network of like minded entrepreneurs. Even if they can't offer you any help with your business it's always good to make connections. If you're still in the early stages, it's probably best to leverage a co-working space before moving to your own office.
Startups are tricky. Navigating through the early stages of a startup will really age you. The best way to mitigate risk is to stay lean as long as you can. Use these three tips to stay lean and mean during your entrepreneurial journey.