Running a startup is incredibly difficult. The biggest challenge entrepreneurs face is keeping costs in check. Nearly three quarters of businesses fail, due to poor financial management.
The good news is that there are a lot of tools that can help growing startups cut costs and manage their finances. Here are some to take a look at.
In 2017, every website needs a content management system (CMS). You can’t manage a reliable website without one.
Unfortunately, some of the most popular CMS platforms weren’t designed with small businesses in mind. WordPress is one of the worst.
Here are some reasons WordPress is so expensive:
- The cost for a theme is about $200. Since companies often have multiple themes this adds up. This wouldn’t be such a big deal if themes were appropriate as is, but they rarely are. You need to spend even more money getting a designer to modify them.
- Themes need to be heavily modified before they can be used for small business purposes. Even many SMEs have to spend over $20,000 to create a useable website.
- You need to spend a lot of money on plugins, since the WordPress framework doesn’t do the job. One company reported spending $142 every month for plugins.
Duda is a responsive website builder which specializes in building SMB sites. It’s a much better alternative and cost-effective solution for developing small business websites than WordPress, which is primarily used as a blogging platform.
Electronic payment options and credit cards have made life a lot easier for consumers. However, they can also be a serious headache for businesses.
One of the biggest downsides with accepting credit cards is the fees. Small businesses typically have to pay a $0.21 transaction fee and up to 5% interchange fee for every transaction. These fees can add up very quickly.
While these fees are less consequential for businesses that process many credit card payments ever month, they can be financially crippling for growing startups. Fortunately, Square.com is a great alternative.
Square changes a single, flat transaction fee on every purchase. While the flat fee is higher than the average credit card merchant account, it doesn’t come with a half dozen other ancillary fees. According to an analysis from Merchant Maverick, smaller businesses tend to save money using Square.com over a merchant account.
If you are accepting fewer than $5,000 worth of credit card payments a month, you should consider using Square.com instead. You can also use it to accept payments online.
#3. Rely on Google Docs Instead of Microsoft Office
Microsoft Office is the gold-standard for word-processing, spreadsheet management and plenty of other purposes. However, it is far from free. A license for Microsoft Office Pro costs $99.96. If you want to use Microsoft Office 365 instead, it will cost $9.99 a year.
While this may not sound like a lot of money, it adds up if you have multiple employees that need it. If you have an office with a dozen employees that need access to Office, you’ll be paying over $1,000.
You can save a lot of money by using Google Drive instead. It is completely free, so you can avoid many of these costs. You may not be able to get away without buying any Office licenses, but you don’t need one for every computer if most of your employees are only sharing documents in-house.
#4. Small Business VOIP
All businesses need to make phone calls. Even web-based companies have to deal with the cost of making phone calls.
The cost of making phone calls has remained high for years. In 2004, Inc. reported that the average small business spent $550 a month on phones. A large share of that expense was due to employee cell phones. According to Forbes, as more brands are urging their employees to use cell phones, these costs are rising.
“Given the improved capabilities of cell phones since the beginning of the century, it is no wonder that cell phone bills have averaged a healthy annual growth rate in excess of 15%. Alongside the rise of mobile devices has come the fall of landlines, which see far fewer dollars devoted to them today versus 2001. Mobile phone costs are becoming an increasingly more relevant component of consumers’ budgets. It makes you wonder just how much you will spend on your mobile phone service 10 years from now.”
Using a VOIP system can be a great way to shave costs. PC World reports that you can purchase a VOIP plan from Vonage for as little as $15 a month. You can also use a Pay-as-You-Go plan with Skype, which can be a very cheap way to make international calls.
PC World reports that there are a number of ways VOIP systems save money:
- They eliminate the need to install new phone lines.
- They are highly encrypted, which reduces the costs of security breaches.
- It doesn’t cost extra to get voicemail.
There are dozens of VOIP providers, so this is a feature your startup should look into.
Many startups view social media as a free means of promotion. Once they actually start using it, they realize nothing could be further from the truth.
They will run into one of two problems:
- They try to handle all of their social media themselves. It takes at least 15 hours a week to create a viable social media campaign (even more if the owner doesn’t know how to run it effectively).
- They hire an in-house social media team or outsource to a social media management agency. This can be very expensive if they don’t know how to do things efficiently.
There are plenty of reasons social media is a great way to grow your startup’s grand image, but it definitely isn’t free. You need to invest in social media automation tools like HubSpot to save money. These tools can save you thousands of dollars a year.
Use Technology to Run a Leaner Business
Running a startup without going over budget is very difficult. Lots of small costs add up, which can drive your growing business into bankruptcy.
Fortunately, there are plenty of ways that you can use technology to save money. Always keep an eye out for new tools, because they may be both more reliable and cost-effective.