Eight ways to save money on tech as a start up

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Date: 21 February 2020

A group of start-up entrepreneurs work on devices in their office.

Forming a start up is an exciting adventure, but definitely not for the faint-hearted. In 2018, over 380,000 new businesses were set up in the UK alone, according to the Office of National Statistics (ONS). When setting up your company, you’ll be facing challenges large and small on a daily basis that you will have to deal with.

During your initial period, operating costs will be high while you’re setting up and there won’t be much money coming in yet. Today’s start ups will need a range of technology and software to ensure they’re able to run smoothly and compete in crowded markets effectively.

Every penny you can save is vital to the success of your business, so you’ll need to be on top of budgets and expenditure from day one.

Here are eight ways to save money on technology costs for your start up.

1. Avoid getting tied into long contracts

Due to the economic and political uncertainty surrounding the business world at present, it’s an unfortunate fact that last year, early-stage start up investment was at its lowest in four years.

Right out of the gate, you’re going to need to work extra hard to make what funds you do have available go further.

In order to get the best pricing on some services, you’ll be expected to commit for a year or more. Sometimes, the cost savings are major and it makes sense to sign on the dotted line, but a lot of industries are moving towards a monthly subscription or rolling contract model. Some of the most common are:

  • accounting and payroll software;
  • marketing software;
  • mobile phone call, text and data plans - look for generous data allowances such as SMARTY to facilitate remote working and flexibility;
  • specialist software licenses - go for a monthly subscription at first, and then consider moving to an annual subscription once cashflow has stabilised.

2. Choose your office space wisely

Amazon began life in Jeff Bezos’ garage in the 1990s. Now, while your garage might not be suitable, choosing your first workspace is important. If you’re a particularly small operation, look at serviced offices and incubator spaces.

A managed office is run by a management company which leases out space to smaller companies and individuals. Often, they will already be furnished and will provide you with access to reception services, meeting rooms and other facilities as part of your agreement.

Most serviced office spaces will, in addition to their easy in/easy out terms, also provide high-speed internet connectivity and phone answering services. That’s two fewer things to worry about.

3. Use free software (for as long as possible)

If you do a bit of searching on the internet, there seem to be hundreds of different pieces of software for every aspect of running a business.

Most software developers now operate freemium versions of their products, giving you access to certain features of their product for free, in the hopes that as your business scales you’ll simply upgrade to their full platform, rather than go through the upheaval of moving to a different program.

Freemium versions are different from free trials as they are not time-limited, and are provided on a free-forever basis.

Some popular free or very low-cost apps include:

Look for good deals on up-and-coming software platforms by keeping a watch on marketplaces like AppSumo. You’ll often be able to get a lifetime subscription for a very reasonable, one-off cost. Expect a discount of anything up to 90%.

4. Lease, don’t buy

It’s tempting to spend your seed investment money on shiny new computers and the latest tech. Or, you might go in the opposite direction and find the cheapest equipment you can.

There are dangers to both of these routes. Shelling out a huge amount on new equipment will seriously impact your cash flow, whereas buying cheap equipment can be a false economy as it can be unreliable and you’ll find yourself replacing it pretty quickly.

That’s where leasing can save you money. There are a number of advantages to leasing the equipment you need at the outset:

  • you don’t have to pay the total amount upfront;
  • you’ll be able to afford a higher spec than you may otherwise have;
  • as leasing costs and interest rates are fixed, it makes it easier to financially forecast for your budget;
  • you can often deduct lease costs from your total taxable income;
  • depending on your terms, you may not have to worry about repairs and maintenance;
  • leasing companies often get preferential pricing, which wouldn’t be available to you as a small business;
  • you can renew equipment as it becomes outdated without having to reinvest;
  • you can scale your requirements as you scale your team.

5. Adopt a bring your own device (BYOD) policy

Allowing employees to use their own phones, laptops or tablets for work purposes can mean big savings for you. A study by Cisco showed that the average BYOD user saves around 80 minutes per week and that 36% of users were classed as “hyper-productive” using their own devices.

As long as you take into consideration certain aspects around security, then there’s no reason it can’t work for your business too. Some of the benefits of a BYOD policy include:

  • no outlay on technology (though employees will expect a contribution towards their mobile phone contract and other relevant expenses);
  • no additional training - they already know how to use their own device;
  • employees will usually have up-to-date technology.

Things to be aware of include ensuring that:

  • business systems can be accessed from a range of devices and operating systems;
  • data is secure and able to be wiped or disabled remotely and complies with the relevant data protection laws.

6. Head for the cloud

Having onsite IT infrastructure can be hugely expensive, in terms of equipment, space, energy costs and IT personnel to maintain it.

Today, most services operate in a virtualised environment on the cloud. Cloud computing gives businesses access to a range of IT services and infrastructure at levels suitable for their needs. It is extremely scalable and can be used to accommodate even temporary demands for an increased requirement.

Most software runs on the cloud too. It’s not often you’ll have to install a physical program.

The main advantages of setting up on the cloud from the outset include:

  • No upfront capital investment is needed. All the pain and headaches around designing and setting up the infrastructure are already taken care off by whoever is providing your cloud services. You won’t need to spend on maintenance and break-fix either.
  • Reduced need for specialist IT personnel. Skilled IT professionals are expensive to hire. So you’ll make huge savings on recruitment, salary and other employee overheads.
  • Business continuity - all businesses should have a business continuity plan, sometimes called disaster recovery. It outlines what would happen if there is a major incident that affects your business premises, systems or staff. If something were to happen to your business premises, and all of your business-critical infrastructures was inside, then you would have a major problem on your hands. By hosting your data in the cloud, your team will be able to access systems from anywhere with an internet connection, allowing you to operate with minimum disruption to your business.

7. Set up business accounts with suppliers

Where possible, set up dedicated business accounts with suppliers. You’ll often get really good deals on products and will be able to take advantage of more favourable payment terms, which is great for budgeting.

Most major retailers, like Amazon, Dell and Microsoft, run separate business account streams with dedicated account managers.

8. Set up a barter deal with another start up

A great way to show support for a fellow start up is to use their products or services. If you’re both at the beginning of your journey, partnering up to use and promote each other’s services for free or a heavily discounted price can benefit you both.

Not only will you be saving money, but you’ll be able to take advantage of this relationship from a sales and marketing perspective too. Each company can agree to provide each other with case studies, PR, testimonials, social media sharing and references. It’s a win-win.

For example, if you’re a web design agency, you could build a website for a company in exchange for a subscription to their HR software. Think creatively, and you could build a solid network of start ups supporting each other to succeed.

Copyright 2020. Article was made possible by site supporter Jeremy Bowler

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