Hello, everyone. This is Alejandro Cremades, and today we’re going to be talking about
cost-cutting tips for startups. Let’s face it. Entrepreneurship is not a straight line.
You’re always going to have the ups and the downs. The thing is, it’s not only about
how your business is performing, it’s about the economy; it’s about different things
that you’re going to encounter. In today’s video, we’re going to be talking about what
you can do to course-correct, to extend the amount of cash that you have or the life of
that cash that you have in the bank and what you can do with that, and give you insights
into how you can maneuver and execute during those times when you may be on the other side
of the mountain. With that being said, let’s get into it.
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? Also, renegotiate. We were already talking
about renegotiating some of the contracts. Maybe another thing that you can do is renegotiate
the lease of your business. Perhaps they’re also suffering. Maybe there are people leaving,
and they want to retain you, especially during tough times on the economy. One thing that
you could do is to try to see if they would be willing to give you a lower amount that
you have to pay every month. Again, renegotiate as much as you can. Maybe there are other
contracts, people that you’re dealing with, third-parties – renegotiate absolutely everything.
Another thing that you can do is restructure your team. Maybe this is the opportunity to
take a look as to who you have on your team. What are they all doing? Maybe there are certain
tasks that can be given to someone else that can also deliver those in addition to whatever
they have. Maybe you are outsourcing things that you could take in-house and remove that
expense. So, take a look as a whole to the team, and then see who is actually going to
be delivering, who is not delivering anything and not moving the needle at all, so you want
to remove those and add that time to someone else that can deliver. Maybe you even do it
yourself. Again, whatever you’re outsourcing, try to bring it in-house and avoid that expense.
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. Then, in the
2000s, it was the necessary thing to do. But now, with technologies, there is no need for
you to go have coffees left and right, or for you to go have lunches and dinners left
and right. You can remove many of those and do it online via video conference or whatever
you’re using. Also, that’s going to be not only a cost that you’re removing from
the expense of the cost of those dinners, coffees, and whatever that is but then also
your time. You’re wasting a lot of time on the commuting, for example. That’s time
and cost that could be allocated somewhere else or that you can save.
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.
We’d love to hear on the comment section how you’re going about cost-cutting. Also,
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so much for watching.