Today’s startups are encountering market conditions that are less than ideal. Inflation is driving up costs while curtailing customer spending.
A labor shortage is making it harder than ever for startups to attract and retain talent. Oh — and there may be a global recession just around the corner.
But none of that means a startup can’t thrive. It’s just that to do it — they’ve got to run as lean as possible and seek efficiency wherever they can find it.
And the good news is that there are plenty of excellent ways to do that. Here are three ways for startups to cut costs and boost efficiency to thrive in the coming recession.
Reduce Unnecessary Overhead
The first thing a startup can do to cut costs is to aggressively work to limit its overhead. That means they should consider options like shared office space — or even foregoing offices altogether in favor of all-remote working arrangements.
Depending on the location of the startup, doing so can save anywhere from $500 to $5,750 per month. And since office space makes up a big part of the average startup’s overhead, this is the single largest cost-saving measure available.
But it’s not the only one. Other overhead-trimming options include leasing necessary equipment — or better yet — purchasing used equipment. And limiting unnecessary travel in favor of video meetings can help too.
Altogether, these measures can help a startup to run as lean as possible without compromising its ability to fulfill its stated goals.
Embrace Workforce Productivity Tools
The next thing startups can do to cut costs is to look for ways to improve per-worker productivity. Doing so can trim what is the average business’s largest budget item — labor costs. And, it can alleviate some of the burdens now imposed by the tightening labor market.
In other words, by getting more work out of existing employees, you can simultaneously optimize labor costs while removing the need to recruit, train, and retain new workers.
The best place to start is by choosing and deploying a digital onboarding system. This ensures that every new hire can hit the ground running and do their job well from day one. Then, it’s a good idea to equip all staff with the latest in digital communications and collaboration tools.
Doing so lowers intra-organizational barriers and improves employees’ work output. And last but not least, it’s essential to deploy an employee tracking system to collect and analyze data about how workers use their time. That way, managers can fine-tune workflows to get the most out of every individual employee.
Lean Into Automation
The final step for startups to cut costs and improve efficiency is for them to look for opportunities for automation throughout their operations. These days, it’s possible to automate everything from accounting workflows to marketing campaigns.
By doing so, it’s possible to put a substantial portion of routine business operations on autopilot — freeing up employees for tasks that directly improve bottom-line results.
For example, the average startup can use automation to handle a significant part of their HR operations, as well as their payroll. That means less spending on HR specialists and no need to outsource payroll to an outside firm. But that’s not all.
Embracing automation in marketing operations can allow a startup to devote a greater portion of its marketing budget to actual customer-facing campaigns. That, in turn, means higher sales and stronger revenue. And all without spending much — if anything — on additional staff.
A Lean, Mean, Startup Machine
Despite the challenging economic conditions, it’s still possible for startups to grow and succeed. As long as they’re careful to run a lean and efficient operation, that is.
And by using the three tactics detailed above, they can do exactly that. Together, they make it possible to cut overhead costs, optimize labor costs, and eliminate the need for new staff to handle easily-automated tasks.
In other words, they can turn any startup into a lean, mean, efficient machine that no recession could ever hope to slow down.