Do you have a startup spending strategy?
According to Statista, IT spending is expected to reach around 958 billion U.S. dollars worldwide. Of course, the majority of that amount will be spent by well-established corporations and enterprise businesses, but smaller companies and startups are also investing a lot to grow and scale their operations.
It can be challenging to determine how to spend money wisely when you’re launching a new business venture. One of the best ways to control startup expenses is to have a solid startup budget and spending plan in place from the very beginning.
If you really want to get the most bang out of every buck invested in your startup, having a well-planned spending strategy is key.
Startup costs examples
Business startup costs include staff salaries, office space, fixed assets such as office furniture, laptops & computers, phones, software licenses, office supplies, etc. These are just the basics, not taking into account marketing expenses such as advertising, trade show attendance, and direct and email marketing campaigns.
Startup costs can differ based on the type of solution being developed and the size of the initial staff. It’s important to know exactly what your fixed expenses will be in the early stages of starting a business. The more detailed your budget, the higher your chances are for overall success.
Developing a spending plan
Before you even decide to launch your startup, you should meet with all the key players involved and brainstorm every possible expense you may encounter. Getting input from others can help you see potential expenses you may not have considered previously and can save you money in the long run.
Once you have a list of all possible expenses, it’s time to prioritize.
Deciding where to spend your startup dollars
Do you really need expensive office space in a hip and trendy tech neighborhood right off the bat? Perhaps you could save money by securing a co-working option through companies like WeWork, Regus or The Yard.
The most important place to spend your startup budget is in developing the product itself. Hiring the most experienced and talented development staff should be a top priority. Hiring full-time employees can be incredibly expensive and time-consuming. You should really consider an outsourced team in the beginning stages of development, as it is the most affordable and least time-consuming option. You’ll be able to scale your team up or down as needed and you won’t have to worry about expensive benefit packages.
Two other areas to focus your spending in the early stages include hiring an experienced QA team and developing a marketing strategy. You’ll actually end up saving a lot of money by planning for both of these expenses and implementing QA and marketing throughout the lifecycle of your product development, rather than throwing together a plan at the last minute.
In conclusion, the best way to save money and not have a high burn rate as a startup is to have a rock-solid spending strategy in place to begin with. This allows you to focus your efforts on building and delivering a great product, which is the key to your startup’s success.