A startup is a new business with high ambitions. Startups intend to get investors on board to scale and grow.
Startups generally aim to create a product or service that solves a single user problem, either one that’s not been addressed before, or to solve a problem in a brand new way.
See also: Essential tips for starting a successful startup
Startups look for investors
A startup is a new business, but unlike other new businesses they usually have very limited revenue at the beginning and rely on getting investors onboard while they develop their product or service and scale up their business model.
At the beginning the focus is on validating the idea, doing user research, and building what’s called a minimum viable product (MVP). This is a prototype that lets them test whether the business idea is viable.
They might do several rounds of funding before they launch their product, or before their product starts making a profit.
How to save money in the startup phase
In the startup phase, it’s important to spend money on the important things, like testing and validating your product, user research, hiring for important positions, and so on.
You should look to cut all other costs, and work smart and agile to reach your goal. Here’s how to save money:
- Set up a budget—once you know what money you’ll be getting in, both from sales and from investors, you can see if your expenses are manageable.
- Hire versatile employees. An employee that can do both project management, marketing, and user testing is worth more than one single project manager. Especially at the start, when you might not have the funds to hire a whole team.
- Find cheap or free software alternatives that can automate your tasks, for example accounting software or invoicing software. You can try out free invoicing software even.
- Negotiatie with your suppliers for better payment terms, extended due dates, or discounts. If you buy in bulk or agree to a long-term contract, you might be able to get a better deal.