Welcome to the third in our Startup Smart Series. This series of articles is intended as a quick reference guide to the things young startups need to know and provides some tips and tricks for savings cost and knowing what to expect. With a little bit of knowledge and creativity you can startup your business for a relatively small amount.
In Part 3 we focus on back office or business process tasks. If you always thought setting up your office would cost thousands this piece will show you how you can startup for much less. With a little bit of creativity and the right information you can drastically reduce your costs.
For illustrative purposes, we’ve created 3 different budget levels depending on your needs:
- Super Saver – the startup approach for those with very little cash,
- Cost Conscious – where you have a little bit more than nothing to spend but are still on a very tight budget; and
- Restrained Spender – still starting up on a budget, but where you can afford to have someone else do some of the tasks.
Which approach (or mix of approaches) you choose will depend on the business you are starting and the skill set of those in your team.
|Office/Workspace||Why?You need somewhere to carry out your business activities whether it’s at home, a coffee shop, retail or office space. But there are many different options depending on your business and budget.
Office space or workspace can be very expensive – so if you don’t absolutely need it don’t spend money on it. If you don’t want to be stuck at home all of the time, there are plenty of places you can go without costing a lot of money. You can also consider linking up a virtual office environment by connecting staff via Skype or other remote working tools.
Same day to months depending on type of space.
Consider what you need to work efficiently, how many people you need space for and consider what, or if, you can afford to spend any money on office space.
Of course you can work from home at no extra cost, but if you want to get out of the house you still have options. Coffee shops and libraries are the obvious choices. Work Snug is a useful website that lists and rates local places to work. It rates them based on noise, wifi access and power point availability.
Cost Conscious – Hot Desking, Co-working, Clubs
If you want somewhere more permanent to work or maybe somewhere you can meet with your team you can try private clubs that cater to businesses, hot desking or co-working locations. Desk Wanted also has a global directory of co-working venues.
A list of clubs and co-working venues can be found here.
Restrained Spender – Office Space
As a young company you’ll probably be looking at serviced office space rather than taking on a long lease of an independent office. The shorter lease and fully-fitted options provide flexibility and bundled costs, but they can cost a lot. However, you might consider looking at Gum Tree or Craig’s List rather than going to serviced office providers. Often you can find cheaper alternatives to official serviced offices as companies look to sublet a portion of their space. That’s not to say that all professional serviced office providers will necessarily be too expensive. For a selection of providers look here.
What to Look for:
The key to determining the actual cost of workspace is determining what’s included or excluded in the quoted price. Here are a list of things to check:
Super Saver = £0; (or the cost of a coffee)
Cost Conscious = £50-300/mo
Restrained Spender = £200 – £600
(prices are per desk)
|Hiring Staff, finding Cofounders||WhyChances are at some point in your business development you’ll have to find cofounders (business partners) or hire staff. Whether it’s finding interns, cofounders or employees the process can be very expensive, but there are a number of tricks you can use to keep the costs of the hiring process to a minimum.
Lead Time: 4-6 weeks
The methods you can use to find cofounders will vary from the ways in which you can find interns and employees. Looking for cofounders or business partners will be a more individualised search as you are looking for someone who is able to take part of the responsibility for running the business. Employees and interns need to bring the right skills to the table and fit in with the culture of your startup, but you won’t be relying on them in the same way.
The first port of call is to review friends and acquaintances – former work colleagues and the like who might be a good match with what you are doing. But if you don’t have the right match in your current list of contacts there are a number of good sites where you can post information about you and your business and or solicit others to join your startup. These sites are commonly referred to as Cofounder Dating an a list of resources can be found in the StartUP LunchBox Resource Database – Cofounder Dating.
You can also join relevant local Meetup Groups where you can look for potential cofounders.
Enternships allows you to post internships and permanent rolls for free. The site focuses on jobs in startup companies so applicants will already be attracted to the startup lifestyle.
You can also add a careers page to your website and advertise your own job openings.
Inspiring Interns has a number of recent graduates looking for internships on their books. Recruitment is free, but you will need to pay £500/mo to “hire” the interns. An alternative is Recruitment Genius , which provides a £199 recruitment advertising process.
When looking for permanent staff you can also consider selecting a few job boards that are frequented by professionals with the skills you are after. Set a budget and select a few boards on which to post. You can also utilize more expensive options like Recruitment Revolution, which is similar to Recruitment Genius, but it charges £500 payable upon successfully filling the vacancy.
The StartUP LunchBox Resource Database section on recruitment can be accessed here – Recruitment Sites.
What to Look For:
How Much (recruitment not salaries)?
Super Saver = £0;
Cost Conscious = £199;
Restrained Spender = £500 (own recruitment posts are roughly £150-£200 for a 4 week posting on mainstream sites)
|Legal||WhyIn order to trade you will need to have a basic set of legal documents to safely cover your interaction with customers. At a minimum you’ll need:
As you progress you may need a non-disclosure agreement for discussing your business with potential partners, service providers or investors. You’ll also need contracts for contractors or employees.
Lead Time: Same Day or Weeks
The most cost effective way to prepare these documents in your early days of trading is to purchase legal templates which you can then customize for your business. If you are undertaking unusual or complicated transactions then it’s best to seek direct legal advice. Similarly if you aren’t sure the templates are right for you and your business.
Templates offer a good cost effective way of obtaining high quality legal documents. Bear in mind that even if you were to go directly to a law firm they would effectively be using a template as well when drafting these startup legal documents as there are many similarities in this type of work.
What to Look For
And if you’ve decided to hire a lawyer directly
Super Saver = £0, Startup LunchBox Templates
Cost Conscious = £100 (other templates, cost estimated on average purchase price of 3 templates)
Restrained Spender = lawyers fees can range anywhere from around £100 per hour up to many multiples of that. Lawyers are required to be transparent as to cost, so make sure you ask what the total price will be at the outset so there are no surprises. A good lawyer will be able to give you certainty (based on assumptions that they agree with you).
|Accountancy||WhyIn order to run your business properly (and legally) you’ll need to keep track of cashflow, invoicing/payments and tax.
Lead Time – Same Day
If you are skilled in accountancy or if your business has particularly simple cash flow you maybe able to simply use a spreadsheet for calculations. However, chances are you’ll need something a bit more organised. Accountancy software can be found for general cash flow, invoicing/payments, and tax in particular value added or sales tax.
With the proliferation of cloud based software there are a number of low cost or free accountancy programs. And, depending on your usage levels, you may be able to get away without paying anything.
Companies such as Wave Accounting offer a completely free service as they fund their platform via advertising.
Pay for premium versions of online software.
You may also choose desktop based software but bare in mind there will be a larger up front cost and the software will not be automatically upgraded.
Some accountancy firms such as Cheap Accounting offer standardized and low cost fees for standard work.
What to look for
How many users can access the software?
How frequent are the upgrades?
How many clients/vendors does it handle with regards to payments and invoicing?
Does it calculate tax (VAT or sales tax)?
Is there a free version of the software you can use during the early stages of your business?
Super Save = £0
Cost Conscious = £60 – £600/yr
Restrained Spender = £360/yr
|Insurance||WhyCertain type of insurance are required to operate legally in the UK:
Other types of insurance can be used to protect your equipment from theft or damage.
Details of legal requirements and other types of insurance can be found through Business Link.
Lead Time – Same Day
Simply Business offers a price comparison service for business insurance. Some banks also offer links to insurance brokers as part of their offer when you open your bank account. Shop around and check out what’s available.
What to Look for
What’s the deductible?
What the exclusions and inclusions?
What actions void the policy? (e.g. for contents insurance does an alarm need to be set on the premise for the policy to be valid?)
Highly variable, prices may be around £500.
|Licences||WhyDepending on the business activities you plan to undertake you may need special business licences. For instance sale of alcohol and food will require licences. And if you play music on your premises, you will need licences from PRS for Music and PPL.
Lead Time – Variable Depending on Requirements
Investigate whether there are any licenses your business requires. Business Link