It happens more often than you'd like: You go over your financial statements every month and find you've gone over your budget.
But all your expenses seem necessary; rent, legal fees, software that you use daily, etc. How do other businesses, that have the same needs as your business does, get by on similar financials?
It's possible that you're spending way more on certain expenses than necessary.
These 13 entrepreneurs from YEC have learned how to get the same products and services they need for their businesses, but pay near minimum. Here are the top likely culprits of what you're overspending on your business.
If you're not capturing all of your receipts for expenses, you may be leaving money on the table. For example, if you order something online for your business, and the company sends your receipt via email, do you automatically print it out for your accountant? Some things slip through the cracks, and it could be costing you more than you know. – Nicole Munoz, Start Ranking Now
Now, I'm not a lawyer, so this isn't legal advice, but most startups should be going one-of-two routes: One, you should either sell a firm on deferring fees until you hit a fundraising milestone. Or, two, if you don't plan on raising money, you should go to a marketplace like UpCounsel or LegalHero. There, you can post what you need and have qualified lawyers bid on the project. – Fan Bi, Blank Label
3. Early-Stage Senior Management
A lot of startups are paying too much too soon on senior-level management. You don't need a CFO or COO right away. Unless you've raised a large Series A, you don't need to build your senior management team so early in the game. Instead, focus on developing on-the-ground executors. – Douglas Baldasare, ChargeItSpot
Companies often shell out thousands to have someone else tell their story, but who can really convey your unique vision and efforts better than yourself? I’ve found that controlling your story internally, whether through yourself or a small marketing team, is the best and most efficient way to get your name into the press. – Elle Kaplan, LexION Capital
In cities like New York, Los Angeles and San Francisco, business owners pay too much for rent. Dollars should be put back into the business to scale it, not into 10,000 square-foot spaces with a ping pong table. Companies like WeWork, which provide month-to-month private office space worldwide, are great low-cost options to expensive long-term contracts. As a bonus, WeWork has their own ping-pong tables. – Kim Kaupe, ZinePak
Related Article: Reign It In: 6 Practical Tips for Saving Your Small Business Money
Too many companies are paying way too much for hosting. Most business owners don't know hosting and the costs behind it. So they end up getting a lot more of a machine over what they really need. Using services like Amazon Ec2, you can easily scale your company if you need more. Pay attention to hosting costs, as most are not needed. – John Rampton, Due
7. Search Engine Marketing (SEM) Traffic
One thing most companies overpay for is Search Engine Marketing (SEM) traffic. Most SEM campaigns suffer heavily from keyword inflation. A small percentage of SEM ad spend produces customers conversions, which means roughly the majority of businesses' SEM ad spend is possibly being wasted. Business owners need to analyze their SEM campaigns in depth and figure out if they're wasting money. – Anthony Pezzotti, Knowzo.com
8. CRM Software
People tend to spend more on products that promise to solve their problems. In reality, a day of planning and setting up could save you thousands, because you realize the bells and whistles are no match for well-crafted architecture. – Carter Thomas, Bluecloud Solutions
There is a time and a place for consultants and they can add a tremendous amount of value, but a lot of small business owners pay way too much for advice. Customer interactions are incredibly valuable, and having that filtered through a third party hides many of the key learnings for a savvy entrepreneur. – Douglas Hutchings, Picasolar
I've seen people raise an obscene amount of money to spend on a prototype or MVP when it's entirely possible to do it for far less. As a startup, you should be thinking of ways to cut costs, while not taking shortcuts on quality. For instance, at FenSens, we took a risk to finish the prototype overseas, which cost a tenth of the cost of doing it here. However, it will take more diligence on your end. – Andy Karuza, FenSens
11. Recruitment Fees
Startups often outsource hiring to recruiters, but even the best recruiters can't outperform you and your leadership team. Have an in-house person to manage nonvalue-added tasks of recruitment, but your leadership team should spend few hours per week to filter the relevant profiles in the pipeline. This will help you find the right candidate and save a lot on recruitment fees. – Shilpi Sharma, Kvantum Inc.
12. Credit Card Processing
I own a merchant account brokerage, so I intimately know from reviewing thousands of businesses' credit card processing fees with competitors that they are paying too much (on average 30 percent too much). It's such a fundamental part of the way payments flow through a business, so it's senseless to pay this much for a service you can typically replicate with ease. – Darrah Brustein, Network Under 40/Finance Whiz Kids
Related Article: The Curse of Quick Success: How Zynga Blew Through $600 Million
Electric clauses in leases are about 10 pages long and complicated. Landlords often take advantage of this and use it as an opportunity to make extra money. Make sure you have a well-versed tenant representative, real estate broker and real estate attorney to look carefully at the, often ridiculous, electrical clauses so they can be negotiated and handled before you sign the papers. – Stanley Meytin, True Film Production