Guest post by Janica Ng
Startups are on a healthy growth as they dominate the market, with more and more new companies forming each year. However, out of thousands of startups that establish themselves annually, only around 10% survive for more than five years.
Our guide will help keep you on track of your expenses, and present you with some usual mistakes when calculating your company budget. While each company is different, here are a few dos and don’ts when it comes to budgeting your startup.
DO tasks yourself to save on expenses.
As the owner, doing simple tasks like auditing and social media management yourself saves up on expenses. There are numerous programs available online to make the task easier, and you can also take online learning courses to learn how to do these simple administrative tasks for the benefit of your company.
While this may not be the ideal setup in the long run, it provides a good remedy for cutting down expenses while establishing your startup. You should be hiring more employees for different tasks as your company grows.
DO prioritise tasks for budgeting.
With a limited budget, it is often difficult to figure out how to distribute your funds equally among the different departments. Set up a priority table to properly allocate funds to where your company focuses the most. Need more traction? Put your budget towards marketing. Need more people? Allocate budget for hiring freelancers or full-time employees.
DO budget for cleaning services.
Everyone contributes to their company one way or another. In a large company, a cleaning crew helps maintain the office, and keeps the company reputation spotless. A startup is no different in that you need to maintain cleanliness around the office for productivity and morale.
Allocate a budget for cleaning services. You can save up on general cleaning with some janitor cleaning tips, but nothing beats a full cleaning service. If a full-time cleaning crew is out of your budget, avail of scheduled cleaning services instead.
DO make use of the space in your office.
Every space in your office is vital, regardless of how small. Moving to a larger office space is expensive and time-consuming. While you may be moving into a larger office space in the future, make the best use of the available space in your office, and you may be comfortable in a small office space while you focus on growing your business.
DO avail freelance work.
In a startup, you generally have a smaller workforce than a large corporate office. Freelancers work by providing much-needed services, typically for content and graphic design, customer service, and marketing purposes. Startups can avail of freelance work when needed to save up on costs of hiring employees full-time.
DO budget for cybersecurity.
One of the most important aspects in today’s competitive market is cybersecurity, especially for those companies that deal with a lot of sensitive information like banks, e-wallets, medical data, and technology. Your company would greatly benefit from a thorough cybersecurity protocol put in place to prevent hacking attacks and to smooth operations digitally.
DON’T forego a proper budgeting guide.
A company without budgeting is not sustainable. Ensure your business is trekking on the right path by following a strict budgeting guide. The guide should make sure you don’t overspend, and that you put priority on the focal points of your business.
DON’T base your budgeting decisions without research.
Spending without scouting is a novice mistake. As with every company expenditure, do your research first before purchasing anything, as you may be surprised to find the exact same item or equipment at a much lower price.
DON’T replace employees with interns.
Many companies, to save up on costs, hire interns instead of employees for a much lower wage than full-time workers. While in the short-run, this may save your company money, the high turnover rate, coupled with the inexperience of interns, can cause costly problems for your company later on. Best to hire someone fit to work on those operational tasks instead.
DON’T base your budgeting on corporate comparisons.
When drafting your budget, you have most likely gone online to compare your budgeting with famous, successful companies. You still have to reason that your startup is, well, just starting up and would incur costs differently than a corporation would. Take into account the size and nature of your company to avoid overspending.
DON’T choose an unnecessary space for your office.
Back to large office spaces, they may be pretty, but they’re not functional. Nothing screams unnecessary costs more than unused space. Utilize the space you already have in your office for your business, or set up a relaxing corner to keep up office morale. Make that space functional.
DON’T skimp on marketing costs.
20%-30% of the annual income of your company should be spent on marketing. In our global market, the ones that come out on top are those with the best marketing plans, as proper marketing is at the forefront of brand awareness, and will ultimately design your company’s image. Marketing doesn’t have to be expensive, but take research and tools into account.