Six Smart Ways Startups Can Keep Their Operational Costs Low

Billion-dollar valuations, fancy offices at an upscale location, and high pay executives, this is what budding entrepreneurs dream of. However, such dreamsrequire a long journey to fulfill.The realities in the initial stages of a startup are quite frugal. Unless investors back up your startup before the product development stage, you need to work around limited personal funds.

There are many challenges and uphill tasks in the form of product development, attracting talent, marketing, and generating financial sustainability. In addition to that, entrepreneurs also need to maneuver in the market and understand business management. Usually, new business owners find it challenging to prioritize what elements to keep around and cut off to stay afloat.

If you’re running a startup and are trying to cut down your costs, here are some smart ways to go about it and keep your operational costs low.

  1. Smart recruitment and hiring plan:

Highly qualified talent is somewhat crucial for the development and progress of any business in its early days. But quality human resources come with a high price tag. Now we’re not saying that you compromise by hiring cheap resources, but simply to play smart. You must understand the skillset, level of experience, and knowledge required to fill specific job roles. Similarly, make sure that the desired candidate aligns and fits with your startup’s culture. Hiring the wrong person can harm your business financially as well as decrease productivity. Protip: if you can hire someone to fill more than one job role without affecting overall productivity, DO IT!

You can also consider hiring freelancers for specific jobs and work-related tasks instead of keeping employees on a full-time salary. They might not be as dedicated and committed, but you would save money that can be invested elsewhere in the startup.

  1. Office space and rentals:

Renting an office space can be a significant cost sink for any business, let alone startups. Before getting into the awe of renting out and having a fancy office, consider other alternatives to keep the ship afloat. In the age of tech capabilities, you can have a team working remotely. There are numerous communication tools like Slack, Zoom, InVison, etc., available for free or at a nominal price that makes remote working sustainable.

Similarly, suppose your team and business outgrow your home office. In that case, you can consider moving to a coworking space with up-to-date amenities.Shared working spaces can help cut down rental expenses and build a network with other entrepreneurs in the vicinity.

  1. Smarter and organic marketing:

Marketing and promotions can make or break any startup. Due to inadequate marketing efforts or wrong promotional plans, startups might lose out on incredible products and throw large amounts of money down the drain. Although, for the sake of reducing costs, eliminating paid advertisement is not a wise strategy. However, some marketing methods can save money yet promote your brand or product effectively.

  • Sometimes customers buy from you because they know you. Therefore, it is essential to network with potential leads and customers through multiple channels.
  • DIY Marketing.Although you can’t expect yourself to become an expert from day one, there are enough resources available on the internet to help you out. Read, watch, learn, and do it yourself.
  • Social media marketing.Work smartly on social media platforms and boost your brand’s presence there. The right strategy for the relevant social media channels can help you reach a targeted audience and potential customers.
  • Build online trust. Asking for referrals and recommendations from your current clients can also take your name forward to newer audiences. Word of mouth and customer recommendations,both online and offline, can convert leads to sales faster than usual.
  1. Tracking expenses:

It is essential to closely track your business’s expenses closely to eliminate every irrelevant cost and keep the machine lean. Thedevil lies in the details. From furnishings, marketing, salaries, tax consultations, etc., every expense needs to be booked correctly. The idea here is to identify leakages and loopholes that might lead to financial inefficiency. You can minimize the human effort by incorporating tech into your auditing systems,such as an inventory management system or accounting software. In this way, you can manage your orders, payroll, shipment details, and business expenses with relative ease and lesser manual labor.

  1. Setup a budget:

No, really, do you not have one already? What are you doing then?

Setting up a budget is different than tracking your expenses. Budgeting is as essential for your business as a go-to-market strategy for your product. It provides you a clear snapshot of how much money is coming in and going out each month, quarter, and year. One of the best options is to setup a working budget.A working budget is an on-going business activity. You can look at it, follow it, and adjust the plan and strategy daily. Such real-time adjustments can help you monitor your business capital on a day-to-day basis and avoid shocks at the year-end.

  1. Better negotiations with suppliers:

Another way to save some finances is to look out for better B2B deals regularly. Usually, the start of the year is a good time for you to talk and negotiate with your suppliers. If you don’t find one, you always have the option to look and shop around. Testing the market for new vendors is a good idea, as it reduces your blind spots in terms of what is available in the market for you.

However, it is essential to strike the right balance.Sometimes, over negotiation can hamper your relationship with the current vendor. At the end of the day, building long-lasting, mutually beneficial business relations with suppliers and vendors is what matters the most.


Starting a new business is always exciting. It is also challenging to curb that excitement and pause for a momentto analyze your business spending. However, it is crucial to understand that cash flow is the bloodline for any business, and its mismanagement can lead to a myocardial infarction! Many costs are hard to avoid, but some need a closer look. No one knows your business more than you do. So, track your expenses and create a plan to save costs to keepthe ship from sinking.