Authored by Kewal Kapoor, Director & Creative Strategist, CHAI Kreative and Return of Million Smiles
Starting a business certainly takes more than just an idea. It requires the entrepreneur to put in place a basic infrastructure, rope in the right people, market the business and ensure that it takes off without glitches. In a way, beginning the start up is the most critical phase of the business. Getting a startup off the ground requires a significant amount of initial capital. However, adopting certain intelligent and strategic practices in the initial phase can help you keep your expenses to a minimum and break even faster. The budding entrepreneur must first understand whether his/ her start-up offers a viable solution for the market and whether there is sufficient demand for the good or services it offers. He/she must then exercise all strategies to ensure cost effectiveness of the enterprise.
Here are some simple strategies that can keep your initial investments moderate and prevent excessive reliance on loans.
Start with a focus on digital eco system
In a world where most people scout for business and talent online, focusing on a digital eco system is the best bet in the initial phase of your business. While establishing a full-fledged brick and mortal office takes time and significant monetary investment, establishing a noticeable online presence is much cheaper. This is why running a virtual office is the most cost effective solution for startups. You might actually be operating from your home, but having a virtual presence is sufficient to help you get in touch with potential clients and associates.
While nobody knows your business in real time, a good digital presence helps in influencing people online and attracting healthy footfalls. A digital eco system doesn’t just mean having an impressive website and effective digital marketing strategies; it also includes establishing a distribution channel online and building a strong social media presence. Traditional marketing strategies may require exorbitant budgets. However, social media marketing can help you establish a positive recall value with current and potential clients in a highly cost effective way. Focusing on your social media presence through initiatives such as blogs, facebook posts and tweets is one of the best ways to drive traffic to your website without paying for it.
Don’t rush into hiring too many people in the initial phase of your business. Employees add significantly to your overhead costs and when the business is still in a nascent stage you must try to keep expenses as low as possible. It is always better initially to look for freelance arrangements or consultants rather than add people on payroll. Establish viable partnerships with a few associates and freelancers who can work for you on different projects. Outsourcing work to freelance experts allows you keep your payroll expenses low.
Minimize office expenditure
Once you decide to have a proper brick and mortar presence, make sure you keep the expenses of running it as low as possible. Apart from hiring an area in a low cost locality, having a minimalist workplace also helps. Invest in only a handful of workstations initially and allow the employees a lot of flexibility to operate from wherever they please. It will not only keep your employees happy but will also help you save the costs of running an office. Electricity, stationary, water and other utilities add to the overhead costs which can be minimized by allowing workers to work from home.
Bring your device policy
Another cost effective intervention is to ask employees to bring their personal digital devices to work. The investment that goes into buying hardware and software to establish workstations can be minimized through this policy. You can just invest in a cloud network and allow employees to access it through their own devices. Their own laptops, tabs and mobile phones can become your official machinery. This approach also adds to the convenience of employees and boosts productivity.
Adopt the per person per hour per minute output module
In the initial phase of your business, you cannot afford to have low productivity. It is imperative therefore to chart out your overhead costs and ensure that the expenditure doesn’t overshoot the revenue in any case. The entire purpose of running a business is to ensure that you run an operation effectively. To judge this efficacy, we at CHAI Kreative have invented a module called the ‘per person per hour per minute output’ module. This approach allows a startup to evaluate the productivity of every individual and machine working to manage its operations. Be it operations, marketing or back-end work, cost effectiveness must apply to every section of your startup. Any individual, department or device whose productivity is not 100% has to be chucked out of the system.