In his book titled “The Lean Startup“, author Eric Ries offers wonderful advice on how small businesses can often prevent potential failures by testing and validating their assumptions without expending too much capital. This is a wonderful book for anyone who is running their own business. According to a survey conducted by the National Federation of Independent Business (NFIB), lack of finance is the biggest impediment to the growth for over 16% of small businesses in America.
Given the economic climate and the general lack of finances, it is a great time to explore the concept of running a lean startup. In a lean startup, expenses are kept to a bare minimum with little to no frills in terms of capital expenditure. Such a model ensures that there is always a positive cash flow which ensures that your business continues to sustain even during the times of economic recession.
Thankfully, the proliferation of technology has brought about a drastic reduction in overall business expenditures. Vital business expenses that cost several hundred dollars a month today can be replaced with digital alternatives that do not cost a lot (and are sometimes available for free too!). Here are some of these technologies that can bring about a drastic reduction in your monthly expenditures thus helping your business grow leaner than what it is today.
Paperless Accounting:
Every business needs a strong accountant who can keep track of all the orders and supplies. Earlier, businesses required folders that archived all the purchase orders and invoices that are processed every month. This costs a lot of money due to the consumption of paper as well as the need to courier documents to your partners. Today, all accounting may be processed over the internet using software like QuickBooks, Sage or AccountEdge.
Paperless Contracts:
According to one estimate, it costs around $30 on an average to print a contract document and getting it signed by the partnering companies. Like it is with invoices, most of the cost here is in printing and shipping of the documents. Solutions like e-Sign Live from Silanis make it possible for partnering companies to enter into a safe and secure relationship by signing documents electronically. This avoids the need for paper and therefore shipping costs as well.
Collaboration without boundaries:
Collaboration with your team members has become easier – thanks to the widely available collaboration software like Sharepoint. Unlike the cumbersome software a decade ago, today’s software is easy to install and upgrades. With Sharepoint as an example, upgrades and migration can also be done in pretty straightforward manner with the help of widely available services, such as Sharepoint 2013 migration with Sharegate.
Need to collaborate with your geographically-dispersed team members? Online collaboration tools like Basecamp or Huddle enable you to do so.
Outsourcing Cheap:
As Henry Ford once wrote, “The highest use of capital is not to make more money but to make money do more for the betterment of life”. Outsourcing is a wonderful way to let go of non-core business services and letting experts to do the job for you. It is not only a way to reduce business costs, but also ensure efficiency and sustaining focus on your core operations. Today, it is extremely simple to find cheap and efficient outsourced workers for all your business requirements right from payroll processing to designing and marketing. If you are a business manufacturing widgets, you can hence focus on building quality widgets while outsourcing the rest of the work to a third party service provider.
Distribution Cheap:
If you are in a manufacturing business, there are several costs to shipping a product to the customer apart from the raw manufacturing cost. This includes the cost to store inventory, distribute them, handling the shipment, handling customer calls and managing returns. These costs can easily scale up and make the business unviable. However, with technology, you can minimize the costs on most of them.
A lot of businesses today have launched their store online – web based stores enhance the scope of the target market from your neighborhood to possibly the entire state, country or even the world. However, most business owners stop with just this. Consequently, there is still a lot of money spent on storage, shipping and handling customer calls. It is possible to minimize these expenses by partnering with Amazon for their Fulfillment center.
Fulfillment by Amazon is a program that enables businesses to sell their products over the popular ecommerce store – since the inventory storage, shipment and customer care is handled by Amazon, small business owners do not have to rent expensive resources for this. Also, the services offered by Amazon are ‘pay-as-you-go’ which means your costs scale up only as your operations increase. You do not have to start with a 4000 square feet storage center from day 1.
Technology has made owning business cheap. It is only logical that business owners make the maximum use of these technologies to ensure they do not consume too much capital in just setting up and running their operations. This is not only strong business sense, but is also a protective shield for times when the business is slow.
Author Bio: Anand Srinivasan is an IT market outreach consultant from Bangalore, India. He advises companies on their online go-to strategy. You can reach him anand@gorumors.com
