Cutting corners: what costs to cut or postpone


3

Preserving cash is important. What are some classic business expenses that can be deferred or cut altogether in the early days of your startup?

For example, we still don't have "real" office space, working instead from home offices.

If I had to do it again, I would have waited on getting a separate phone line for my business and simply used my cell phone instead.

In what areas would you trim expenses?

Cost

asked Oct 11 '09 at 05:26
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D Thrasher
894 points

5 Answers


5

I'm going to go out on a limb here but I think too many startups in the software arena are worried about legally protecting their IP too early in the game. Getting top-notch IP attorneys to file patents and trademarks ends up being a huge time and money suck and takes away from the only important activities: building product and getting early customers.

I feel like if what your solving is hard to do, it's going to be hard for someone else to duplicate whether you have filed a patent or not. If it's easy to do, there are a million ways around the patent.

Also, in this day and age if you own the domain, you pretty much own the trademark by default.

I am not a lawyer of course so I could be COMPLETELY wrong on this one. I welcome anybody with more detailed legal knowledge to drop the hammer on me.

answered Oct 11 '09 at 07:15
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Doug Bright
141 points

3

Professionally developed marketing collaterals and logo's can be deferred in the early days of your startup. In my opinion it is very important to first test the viability of your product/service before committing to their development.

I made this mistake a couple of times. In the end we had to have the material re-done because of all the changes that had to made according to the feedback that we received.

answered Oct 11 '09 at 06:07
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Usman Sheikh
1,728 points

3

In the early days, defer any expenses that do not directly help the customer.

This includes common things like office space but also overhead of any form that can be avoided.

Entrepreneurs often tend to rationalize certain expenses with the "this gives us more credibility" argument. But, in just about all cases, customers don't care much these investments -- they just want their problem solved.

Having said that, it's also important to put appropriate value on your time. Don't skimp on small things that will end up taking disproportionately too much time. Like trying to get the best deal on a $500 computer.

answered Oct 11 '09 at 08:02
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Dharmesh Shah
2,860 points
  • Ouch! I've wasted money on the trappings of a "real business" before I actually had a real business. Hopefully I've learned my lesson. :-) – D Thrasher 10 years ago
  • Also from the beginning consider outsourcing accounting and paperwork. It keps you focused and seriously - if a low paid student can do it, then you can work on product and building customers or take some hours off in the evening. – Net Tecture 8 years ago
  • I agree. You should spend most of your time and resources making money. If doing your own accounting takes too much time, outsource it. – March Robert Philip Serrano 8 years ago

1

Corporate image costs (logos etc.)

In the beginning you are unlikely to get the 'right' image. Leave big spends on this until the direction is clearer.

answered Oct 11 '09 at 09:28
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Ronnie Barker
313 points

0

When I was in a startup, we worked out of a room in a basement (not an office space).

We used Google's hosted solutions for email/calendars/etc.

2 of 3 developers were University students on internships/co-op (have to be really careful, but there are some exceptional talent there). Lower pay + government subsidies (in Canada) is a good cost saving route.

There are other government grants/subsidies for startups (once again, I'm only familiar with Ontario/Canada) that could supplement some of the revenue.

All of the developers used their own laptops for development (no investment into hardware).

answered Oct 11 '09 at 06:43
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Tony
358 points

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