Having launched my startup, Entertainment Benefits Group (EBG), the day after 9/11, I quickly learned the value of being frugal during the challenging economic times that followed.
Today, EBG is a leading provider of travel and entertainment worldwide, reaching corporations and consumers worldwide through our corporate benefits program, TicketsAtWork.com, and several consumer sites including BestOfVegas.com, BestOfOrlando.com, BestOfNewYork.com and NewYork.com. We have been able to achieve double and triple digit year-after-year growth and now employ more than 200 employees and serve thousands of customers daily with a combined reach of more than 34 million people annually.
Here are my best cost-cutting tips for startups:
1. Have good personal credit.
Get credit cards, pay them off in full and keep asking for a higher credit line. I did this for the first 24 months and also earned membership rewards points. I soon paid for all travel expenses with the credit card rewards points.
2. Lower your living expenses.
I was young and saved enough money to go about two years without making any money. I lived with my parents for six months to start the company and then had a roommate for three years. When working 12-15 hour days consistently with the ultimate goal of moving up, your confidence is high in knowing that with hard work, you will get there. Where you live and sleep doesn’t seem to matter much.
3. Find a good landlord.
For a new company this is always the challenging part. Try to find a landlord willing to be flexible and supportive. You shouldn’t get too much space, but the trick is always the length of the lease and what to do if you grow fast and need more space. Always be a close friend with your landlord.
4. Rent and do not own.
(unless you already do). Renting gives you more flexibility. Stay away from office condos.
5. Spend more on the company and less on you.
Remember that when spending more on the company means less money for you short-term, but the long-term and bigger picture will make it all the more worthwhile later.
6. Review all bills.
It can be surprising how many errors vendors make on all sorts of bills. Make sure you review your phone plans, electric, server expenses, photocopy details and almost every bill you get. The little numbers add up and a monthly reconciliation can save you thousands. We didn’t pay attention to this early on and when we woke up and started, we were pleasantly surprised.
7. Don’t underestimate the importance of good bookkeeping.
The only way you truly know your bottom line is quality reporting. It is mind boggling in how many entrepreneurs focus on the gross sales and neglect all expenses and proper accounting. I also learned the hard way and learned through mistakes early on. Make sure to not cut any corners, pay the extra money to hire a professional or a strong person to evaluate your accounting and reconcile your finances every month.
8. Don’t buy new equipment.
No need to buy brand new furniture. Large companies move all of the time and in many cases they leave behind their furniture, often times great furniture, which looks brand new. Spending some extra time asking friends, family, associates and business colleagues can save you thousands, and in many cases if you find the right used furniture –it can look brand new. I never bought new furniture during the first 6 years we were in business.
9. Start when you’re young.
You are used to spending less and have not yet developed expensive tastes. You need a healthy balance of having enough experience or mentors in your life to help with answers that you think you should know but don’t, but age is an important factor in starting a business. It’s much easier before marriage and kids come into the picture because if things don’t work out, you don’t have the stress and responsibility that you will have when you’re 35-45.