The Guide to Being Cheap

A few months ago I was involved in a discussion on Hacker News about how startups can save money. Collectively some great tips were shared that benefit startups, small businesses and freelancers.

As somebody within this descriptor you are constant hitting cash-flow challenges. Money is not easy to come by, and is even harder to keep. Working with smaller companies from time to time I’m seeing burn rates (the amount of cash you spend) far higher than they should be. Below is a nicely curated lists of do’s and don’ts when it comes to being cheap and saving money. Much credit belongs to the Hacker News community for generating this list.

Do:

- Always ask for a deal; – Use Skype, an unlimited cell provider or another VOIP provider to reduce phone bills; – Live somewhere with a suitable home office. Don’t expand too fast; – If you have investors, shackle down in their offices; – As soon as you need an office location, use a co-working facility; – Once you expand to a real office, ask the tenants if they can leave any furniture behind; – Try the free versions of everything. Only upgrade if it was useful and ask for a deal; – Barter time over money (i.e. speak at a conference for sponsorship, write blogs for services); – Take public transport over a taxi. You can work from the train (assuming the travel time is similar); – Walk if possible. It saves money, clears your head and saves gym trips; – Brew your own coffee in house. Starbucks is not cheap; – Pick one coffee shop and restaurant for client meetings. Ask the owner for a ‘regular rate’ for taking all of your customers out; – Use an accounting tool i.e. Freshbooks to manage your Invoicing. Don’t spend time on tedious, repetitive tasks that technology can manage free of charge; – Use an internal tool such as Yammer or add co-workers to Skype. Get in the habit of communicating here to save on e-mail overload later; – Until you reach profitability your time has little monetary value. Think twice about time saving apps; – Just…..don’t spend it. No matter how much money is in the bank pretend you have none.

Don’t:

  • Run your own server (web companies excluded) or mail server. It is cheaper to outsource and you won’t have as many headaches;
  • Outsource your core competency. This also means your public facing image;
  • Drink Starbucks. If you need caffeine, make it yourself;
  • Take any money you can. As counter intuitive as it sounds, be laser focused on what you do;
  • Optimize expenses below $100. No matter how poor your company it is probably not worth your time;
  • Use an agency of any kind. Find a freelancer;
  • Create too much conference loot. If you must, pick one item and create it in bulk;
  • Buy new technology just because. If clients do not really expect the newest and greatest (be honest with yourself here) you don’t need it. 99% of what you do is probably e-mailing and word processing anyway;
  • Buy a Smartphone if you are usually in the office. Even cheaper Nokia’s have e-mail;
  • Pirate software. This makes you a bad person.

Where do you fit in?

Saving money is not always easy. I apply many of these philosophies in my personal life and, while not always fun, the end of day cashflow makes it worthwhile. How many of these were you already applying? Do you have any that I missed? Tell me in the comments section below.

Note to Small Businesses in Toronto: Enterprise Toronto will be holding their annual Small Business forum this Tuesday, October 19th with over 1,500 attendees already registered. With a digital media zone, DemoCamp, ignite series and awesome speakers (myself included) this will be one not to be missed. Click here to register.