Had you ever wondered that without making profit from year's. Start-up's are getting various round's of funding from investors without making profit. 100/90 start-up's fail . they waste the money of investors. They classic definition of Business is that; Business is either an occupation, profession, or trade, or is a commercial activity which involves providing goods or services in exchange for profits.
10 Unnecessary Startup Expenses
1. Too Many Full-Time Employees
One big mistake that startups often make is hiring too many full-time employees too soon. Oftentimes, part-time employees and subcontractors make more sense and can fulfill the same needs as full-time employees.
2. Fancy Employee Perks
One of my pet peeves is startups spending way above their means to attract talent. As an early-stage startup, you cannot provide the offices, perks or compensation a Fortune 100 company would. You don’t need coconut water in your fridge to attract talent
3. Outside Leadership Hires
A lot of young startups think the help of someone who already knows everything and can come in elevating your company’s market position is key. My firm promotes leaders from within, which has been empowering to our staff. If there is a person who already knows what your startup should do, why didn’t they already solve the problem your company aims to solve?
4. Office Space
One of the expenses that many businesses take for granted as being necessary is office space. As a 100% remote business, I encourage business owners to question whether they really need an office.
5. Cheap, Short-Term Solutions
Too often entrepreneurs look for the cheapest solution to save money now with the thought of buying a better solution later once they have money. Entrepreneurs shouldn’t dip their toe in the water. They need to go all in and not step over dollars to pick up pennies. Find solutions now that will last for several years whether it be with CRM, people or software that will last for several years, even if it does cost a little more.
Many entrepreneurs see an opportunity to visit a prospect or partner and don’t hesitate to act, resulting in crazy travel costs because it seems worth it in the moment. My advice is to pause and think smartly because travel costs add up quickly. Check the travel aggregator and direct websites. Book at least two weeks ahead and on Sundays.
7. Minimum Viable Products Many startups and large corporate innovators waste money on MVPs before validating that they have nailed the problem/solution fit and the product/market fit. They spend thousands, millions and many months bringing a product nobody wants to market. Tools like lean canvas and smoke tests help solve demand function, willingness to pay, pricing models, strategy and psychology before going all in.
Being reactive to taxes rather than proactive can cost entrepreneurs big. Working with an ineffective accountant who doesn’t understand your business or trying to manage it all yourself can result in major tax surprises. Partnering with a CPA that understands your industry and offers a proactive tax planning approach is the surest way to avoid those costly tax surprises.
9. Premature Scaling
Premature scaling of the business is a huge culprit of wasted money. Hiring staff before they are really needed or getting an established office space to build presences are all unnecessary and major financial drains when you are starting out. Wait as long as possible before hiring your first employee and if possible, focus on building out your systems before putting the people in place
10. Revenue Driver Outsourcing
Nowadays, I have witnessed entrepreneurs outsourcing unnecessary responsibilities and paying high fees for it. This is how startup businesses tend to waste money. Analyze your business needs and your strengths to ensure you can realize the majority of core revenue. For example, don’t start a food truck if you do not know how to cook! For small startups, revenue drivers should not be outsourced.
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