6 ways to keep your costs down as a start-up
£22,000. That’s roughly how much the average UK start-up spends in its first year. It might sound like a lot, but that money has to cover everything from an office and marketing to salaries and software. As your business grows, it’s only going to get more expensive - especially with the cost of living on the rise. So it pays to cut costs where you can.
Not sure how to get the best bang for your buck from that funding round? Try these tips to keep your start-up bills as low as possible and give your business the best chance of success.
1. Create a business travel expense policy
While it might not be back to pre-COVID-19 levels yet, travel is still a big cost for a lot of businesses. In fact, our consumer research found that it accounts for 20-30% of total spend.
A business travel expense policy helps to make sure everyone’s on the same page. You might want to suggest a specific amount you’re happy for employees to spend on accommodation, travel and meals while they’re away. Everyone travels differently, so what one person thinks is a cheap dinner, another might consider a blow-out.
It also helps to create a flat hierarchy and a fairer business. So whether it’s the CEO or an intern booking flights to that work conference, everyone knows the limit.
2. Watch your spending like a hawk
The best way to keep spending down? Keep an eye on it. The more you know where your money’s going, the more in control you’ll feel.
Having a birds eye view of you spending as and when it happens also means you’ll be first to spot anything suspicious which could be costing you. For example, if a supplier has charged you twice, you can get it sorted quickly.
“With our previous way of managing expenses, it was hard seeing where and how we had invested our money over time,” says Ludvig Olsson from our customer, Trickle. “With Pleo, we have full insight into our company spending in real-time, which makes it a lot easier to get an overview and set a budget.”
3. Review your subscriptions
We’ve all been there, watching another £100 leave your bank account for a subscription you meant to cancel but got distracted. When this happens frequently, it starts to add up. It’s worth reviewing your business subscriptions on a regular basis to make sure you’re only forking out for what you absolutely need. (Sorry, company Spotify account, that doesn’t include you).
We wrote about how to keep your subscriptions under control here.
Pleo can also help with this. One of our handy features is being able to categorise your spending. It’s an easy way for the finance team to see how much money is being spent on events, healthcare, travel etc. Sreya from TerminusDB described the categories as one of our “most useful elements… I can see how much we’re spending on food, how much we’re spending on subscriptions. It makes everything easier.”
4. Only hire for critical roles
Salaries are probably one of your biggest outgoings as a small business. Or any business, really. So before hiring, it’s worth putting your focus on the great employees you already have and how you can upskill them for your company and their own benefit.
The next time you think about bringing a new team member on board, ask yourself if this person is essential or a nice to have. Nice to haves are less of a priority - it might be worth outsourcing this work to an agency or a freelancer. Or maybe you could hire a more junior person or an intern?
If you can, try to avoid using recruitment agencies. You could be shelling out between 15-20% of the hired employee’s salary to the agency, which is money that could maybe be better used elsewhere. Have you tried reaching out to your existing network to see if anyone’s open to new opportunities? And don’t dismiss networking events - they’re a great place to meet like minded people in the same industry as you.
5. Reconsider your office space
These days, it could cost you over £100 a month for just one square foot of office in London’s West End. You read that right: one square foot. London might have the highest office costs in Europe, but wherever you’re renting, it’s likely to be a pretty big overhead.
More people are working from home now due to the pandemic which could allow you to downsize your current workspace. Depending on the nature of your start-up, could you ask employees if they’d like to work from home a set number of days a week? If your office comes with a parking space that you don’t use, why not rent it out? Or it might be worth looking into co-working spaces or sharing an office with another business. They say two’s company, after all.
6. Earn while you save
While you’re in the saving mindset, why not earn a little extra too? Get Pleo and you could bag up to £50,000 in rewards and discounts on tools to help your team get their work done.
These are some of the perks you could get your hands on:
- 40% off an annual subscription to Dropbox Business
- $5,000 in credits for Amazon Web Services
- 30% off your first year with Hubspot
Over 20,000 businesses are already loving saving money with Pleo. Why not join them?
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