Did you know that about nine in 10 startups fail within their first year in business? That’s a whopping 90%. And there doesn’t appear to be much variation from industry to industry. Even if startups get through year one, however, they’re not in the clear. In fact, 70% of startups fail within five years of setting up shop. Studies demonstrate that a lack of funding or improper use of funds tends to be among the main reasons startups crash and burn before they’ve had the chance to spread their wings and fly. Containing costs is one way you can look into bootstrapping your company, and your business can thrive rather than merely survive.
If you’ve set up shop in your garage while bootstrapping your startup, you can avoid paying exorbitant fees to rent an office space. But there are other ways you can cut costs. Keep reading for tips on what to do.
Watch What You Drive
The average cost for a car last year was $42,258, with an average monthly payment of $563. Unfortunately, that’s not where the costs end. You also have to pay an arm and a leg for fuel, and you’ll need to pay for insurance, maintenance, and repairs. Even though you can write off some car expenses related to business use, the costs of vehicle ownership can still add up to a small fortune.
If you don’t need a car, one option to consider is to swap four wheels for two wheels. It’ll be cheaper to travel by scooter or motorcycle and even more affordable to travel by bike. If you’re not ready to part with your vehicle, consider using it only when necessary. Some insurers will allow you to insure your car on an as-needed basis. So, you can get it insured for a specific day or for a short period of time based on when you need to drive your car.
Stay Within Your Budget
Even if your credit is pretty good and you can get loans, think long and hard before doing so. The worst thing you can do is shoulder so much debt that it becomes an albatross around your neck. Remember that a lot of startups get into trouble because of finances even if bootstrapping your company and cutting costs is a must. So, unless it’s absolutely necessary, avoid debt like the plague. If you need to borrow money, find a lender that offers the best terms and conditions. Don’t assume one lender’s as good as another. You need to find the right one for your business. And don’t borrow more than you can afford to repay on time.
Track Your Spending
It’s also essential to track your spending. Before doing so, make a budget that helps you spend responsibly. Then you need to track where every dollar is going. You might be paying too much on discretionary items or buying things you don’t need. Doing this will help you control your spending rather than the other way around.
Use Free Tools
For as long as it makes sense for your company, use free tools. So, if your budget is so tight that getting a paid productivity application would be difficult, opt for a free open source alternative. You can find free tools for just about anything you need these days. While you might ultimately need to upgrade, you can save money for a while by sticking with the no-cost tools.
As a startup, you’ll want to do everything you can to give your company the best chance to succeed. There’s so much economic uncertainty these days, and there’s unlikely to be a quick turnaround. The recommendations above will give you some ideas if you are looking into bootstrapping your company and need to cut costs.