December 17, 2020
Now more than ever, companies are struggling to cut down on costs while keeping employees happy. When it comes to stretching tight budgets, startups take the lead because, well, they have to. To help you thrive when cash flow is low, we put together a few startup saving tips that will help you do more with less.
Employees are the heartbeat of any business, big or small, and keeping them satisfied is the only way to succeed in the long-term. But happy employees, especially when they’re talented, are expensive. Startups know this all too well, as they often compete with tech giants and their similarly giant budgets for the talent they need to succeed.
So, how do startups incentivise their teams without breaking the bank?
One startup business strategy that any company can benefit from is compensating employees by covering expenses before taxes. Salaries and bonuses are usually subject to income and social taxes, which take a considerable chunk out of what you pay before it makes it to an employee’s bank account.
Instead, startups often cover employee expenses like gym memberships, snacks and lunches, parking, commuting costs, and even additional healthcare services like counselling and dental care before taxes. This way, your employees benefit more while you spend less. It’s a win-win.
Unless you’re rolling in VC funding that you need to spend by the end of the year, hiring new people is usually not the best way to kickstart new initiatives. Here’s why startups don’t do it.
Compared to established small businesses and corporations, startups tend to have the least amount of resources and the greatest need for helping hands. Expanding without people is a recipe for failure, so what do they do to overcome this?
Outsourcing may sound pricey, but for many startups, it’s often the only affordable way to get expert help. Even the dreamiest of startup dream teams doesn’t have the skills and knowledge to do everything. Delegating parts of the business they aren’t familiar with frees up their time to focus on what they do best instead of jumping from task to unrelated task.
Naturally, some business processes are best kept in-house. Here are a few examples of what you can outsource when your team is struggling to keep up with their workload:
If you still think hiring is the way to go, then the next tip might help you attract top talent on a tight budget.
According to JPMorgan & Chase, COVID-19 has had an even more significant impact on global business cycles than the 2009 recession. The current job market is saturated with talent as a result of mass layoffs, and many companies are abusing the situation by cutting salaries in desperate times.
Let’s play devil’s advocate here and ignore business ethics. Sure, hiring a senior-level marketing manager on a junior salary seems like a great deal on paper, but in reality, they would feel slighted and miserable. It is a well-known fact that employees do their best work when they’re well-compensated — but how do you do that when cash flow is low?
Startups are not known for paying exorbitant salaries, but they do manage to attract incredibly talented people on tight budgets. Their secret sauce is options agreements.
Stock options agreements usually include a portion of stocks an employee can purchase for a strike price set far below their worth. Options are generally given out to employees or vested in increments over four years with a one-year cliff or waiting period. So, if the employee leaves within the first year, they also leave their shares behind, which also helps startups reduce turnover.
As you can see, options are a great way to offer great value without dishing out cash. By allowing workers to be investors at a low cost, you also motivate them to do their best to drive up stock value.
It only took a global pandemic for companies to stop demonising remote work. Until recently, the idea of a fully-remote team was considered eccentric — a concept reserved for idealistic startups. Boy were they wrong.
Simply put, rigid hours are restrictive and unnecessary. When given the option to work remotely, employees tend to be happier and more productive, able to save time on commuting and feel trusted. When it comes to savings, companies with remote working policies tend to have fewer people at the office, reducing overhead costs like snacks, coffee, cleaning, heating — and the list goes on.
Besides these clear advantages, embracing a remote work culture also gives you access to a broader talent pool. Why accept applications from your city when you have the whole world?
All those taxi rides, town cars, and flights add up, and the bigger your company gets, the more difficult it is to link travel expenses with revenue-driving activities. Before you know it, you might be sponsoring rides to the dentist and florist with no way of keeping track without fishing through a mountain of receipts.
Besides hiring a forensic travel expense team to write reports and keep track of employee rides — remember tip #2 on thinking before you hire — you can make use of services like Bolt Business. In addition to being up to 30% cheaper than regular taxi rides, Bolt Business helps companies keep track of employee travel expenses by:
Sound good? Learn more about Bolt Business and how it can help you save like a startup. If you liked this article, be sure to keep an eye on our blog for more insights and tips on growing your business.