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6 Crucial Kinds Of Expenditure Your Startup Needs To Prepare For


In today’s rough-and-tumble startup scene, “lean” is all the rage, and the ability to cut costs without compromising performance is prized above virtually any other managerial competency.

Of course, cutting costs and eliminating whole expense categories are two very different matters. One is healthy, even necessary; the other is not.

These six expense categories can’t be done away with altogether. They’re essential, in fact. But that doesn’t mean they can’t stand to shed a few pounds. Here’s how to trim around their edges without cutting too deep.

1. Creating a Business Plan.

Don’t create your business plan entirely from scratch. Procure a comprehensive template, then flesh it out with your team as best you can. Apply to as many startup competitions as you have bandwidth for; if your idea is as good as you think it is, you’ll be admitted to at least a few. Once you’re in, huddle with mentors to refine your plan. Make it through enough cuts and you might even win a few bucks.

2. Product Development.

This is your meal ticket, so you can’t do anything to compromise its integrity. What you can do is shorten your time-to-market, the period during which you’ll be bleeding cash anyway. Leverage technology-assisted solutions like 3D printing for rapid prototyping to save on limited-run manufacturing and redesign work.

3. Market Research and Branding.

Focus groups are spendy — really spendy. Most lean startups simply don’t have the wherewithal to get a dozen consumers in a room somewhere.

Fortunately, technology makes it easier than ever to conduct market research for less. Using social media, off-the-shelf reports, and virtual focus groups, you can replicate a traditional research effort for a fraction of the cost.

4. Marketing and Outreach.

Market research is only half the marketing battle. Marketing and distribution are recurring costs that you can only trim so far. (Your product might “sell itself,” but it still has to get into customers’ hands somehow.) To keep this expense category in check, you’ll want to lean heavily on digital marketing channels and outsource logistics to trusted partners, like Fulfillment by Amazon.

5. Bookkeeping and Financial Services.

You need someone to keep watch on your books, and that person should probably know what they’re doing. While they don’t have to be a certified accountant, they shouldn’t have to ask you what “double entry” means. Bottom line: you’ll need to pay them pretty well. You can save on the back end by equipping them with cloud-based accounting software and outsourcing tax prep to a reputable business CPA.

6. Overhead.

Last, but not least, you need to take care of the boring stuff: keeping the water running, the lights on, the wires humming. Like the expenses themselves, managing overhead is pretty boring, but that doesn’t mean you can’t achieve big savings through relatively mundane tweaks. To start, install high-efficiency light bulbs, passive climate-control elements like blackout blinds and double-paned windows, and low-flow fixtures. Migrate from hardwired telephonics to VOIP. Reconfigure your office to reduce your per-person footprint. The sky’s the limit here.

Don’t Cut Too Deep.

If it’s not already clear, there’s a fine line between judicious cuts and wild hacks. It’s up to you to wield your cost-cutting scalpel wisely, snipping away at this and that bit of extraneous expense without slicing into vital tissues.


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