As a startup, you don’t have money to spare. Likely enough you’re in a competitive market and have already developed a value proposition which helps you reach your target market in a way demonstrating your advantage over peers. If you haven’t designed such a value statement, that’s a good tip to help increase profitability.
Generally, you should have the sustainable cash flow for your startup, greater profit can lead to that, but there isn’t a one-to-one correlation. You can have great profit and terrible cashflow if you aren’t properly managing resources.
Getting around this requires tracking every expense carefully, maximizing tax incentives, and diminishing unnecessary expenses.
A Brief Thought Experiment
Time can be one of your most surprisingly impacting costs. For a thought experiment, consider how much time a salaried employee takes doing something like payroll, or invoices. If you’re starting out, you may not have templates available for them, and you may be making the task take longer than it has to be through inactivity.
If you’ve got an employee who spends 20 unnecessary hours a month working with online data solutions which could be expedited through, say, a digital invoice template, then you’re wasting 240 hours a year. If that employee is only worth $25 an hour, that’s $6k you’re wasting unnecessarily. You can’t afford that kind of regular loss as a startup.
What makes sense is scouring the web for a variety of invoice and payroll solutions which eliminate wasted time, or could surrogate the need for hiring an internal employee entirely. Clockspot offers some considerable payroll solutions and spreadsheets, and here are some other invoice templates from Freshbooks, which offers solutions that are perfect for freelancers and small businesses.
Having solutions tailor-made to the kind of operation you’re conducting will help you conserve costs, increasing the reliability of cash flow. In that area, there are a lot of cloud-based design solutions which facilitate the design capability an on-site server array would normally provide. Going the cloud route can save your bacon in more ways than one, too.
If you’re a startup, you’re likely operating out of a residence. Granted, you might have rented an office, but that and associated equipment are expensive. Utilizing the cloud, you can put together a cadre of remote employees who operate using their own devices on their own internet connections. This is called “BYOD”, or “Bring Your Own Device”.
If you had twenty employees who needed a laptop of at least a $400 value, you just saved $8k through a BYOD profile; and that doesn’t account for troubleshooting savings. Your only real need is an MDM (Mobile Device Management) profile. This will help keep your devices from being infected with malware or infecting your network.
Basically, MDM notices questionable internet connections and keeps devices from getting involved with your network through them. It can also help you update or deactivate a device remotely should it be lost or stolen. When you can conserve costs like these, you’ll be able to put your resources toward more important expenditures.
Trimming Expenses and Operating More Efficiently
A startup should cut unnecessary employees from the budget entirely, and use available technology tools to facilitate the most cost-efficient operation solutions. This helps increase the reliability of cash-flow.
You’re always going to have unexpected things develop during the course of normal operations which will require you to spend sums you didn’t think you’d have to.
When you can more optimally facilitate day-to-day operations, you’ll not be undermined so totally by such instances. Using technology and careful budgeting are key in helping you achieve the outcomes you need to in terms of reliable cash flow for your startup.