This video discusses cost-cutting tips for startups, emphasizing the importance of refocusing on essential business aspects and auditing finances to identify and eliminate non-essential expenses after raising capital.
What this video covers
The first thing that you want to do is to refocus. When you are refocusing, you want to understand what is that real most important thing about your business? Because before you even dive into the finances, you want to understand what are the single most important things, the ones that are necessary, and what are the ones that are nice-to-have? The ones that are necessary that are moving the needle and that are pushing that revenue, for example, keep the lights on and keep the company self-sustained, those are the ones that you want to double on.
The big mistake that many corporations, the larger ones, actually make is that they cut the wrong costs. What you want to do is revisit your mission, your vision, your goals, and try to identify what are the necessary to have versus the nice-to-haves? Then, you’re going to be cutting the nice-to-haves, but that’s essentially what refocus is all about.
Then you want to audit your finances. You’ve got to go through that statement, line item by line item. What are the things that you are going to be able to live without? You definitely want to cut those. You maybe want to have certain conversations with the people that you are in business with. If you’re giving them a lot of volume or a lot of business, maybe they would consider the possibility of bringing those rates down. What you want to do is cut corners everywhere you can. Obviously, at the end of the day, the biggest costs are going to be the employee count, and then also the office, so you want to try to get rid of the people that perhaps are more like dead weight on the boat, at this point; otherwise, you’re going to be sinking. And you want to optimize and get those people that are absolutely necessary and that are going to be moving the needle forward because when it comes to the finances, you want to keep it lean and to optimize, especially during the tough times where uncertainty is present.
Identify, as well, the wastes. What I mean with identifying the wastes is you want to know where are you putting costs or investments that are not necessary right now? Maybe there are new initiatives that you haven’t even validated, so it’s full of ifs around that. So, maybe you want to put that on hold for now.
Maybe another thing you want to do is, you want to take a look, as well, at not just the money, but perhaps where is time allocated? Where is time allocated that is very valuable that could be allocated somewhere else that is going to push the needle forward on the revenue side. It could be extra meetings; it could be time with leads that typically don’t convert; it could be time with customers that are too demanding, and ultimately, they’re not paying those bills, or they’re late. Maybe there’s a way for you to identify if there is a way to get paid faster. Again, take a look at the whole of the operation and see where are there certain costs that perhaps you can remove from a time perspective and then, obviously, from an investment perspective?
Say “No” more often to meetings. This is really, really critical. In the ‘60s, the whole meeting thing became an explosion. It was the cool thing to do.
Trading instead of purchasing. Maybe there are certain things that you need for your business. Perhaps there are other things that you are not using as much. Maybe you want to trade one for another. In that way, you avoid having to purchase something in addition to whatever you have that is going to be an additional cost.
