Put Your Business on a Diet: Running A Lean Startup

Most entrepreneurs with their own startup fall victim to the "if only I had more funding" bug at one time or another. Many of us think that additional funding is the key to a successful startup. But in falling prey to this sort of mindset, we're unconsciously limiting our ability to run a successful business.

It doesn't matter what business you're in, as all of them think they need more money. Truly successful entrepreneurs are blowing the doors off the traditional funding channels and instead opting for a leaner, and more efficient startup. These startups feature reduced costs, no frills, and systems in place to handle just about everything. It's this sort of thinking that makes these sorts of businesses attractive at later dates, no matter whether the intention is to sell or to attract additional investments in the company. 

Put simply, if you want to attract serious funding, you have to learn how to make your business survive - and thrive - without it.

Here are X ways you can cut costs and make your startup more lean, and efficient.

Do you really need that office space?

Many startups, including huge companies like Google and Dell, were started in a garage. While I'm not suggesting that route for all businesses, some that aren't client-facing could get away with starting a business in a small apartment, or a basement of an existing home. Companies that are largely online could do away with expensive office space, and allow their employees to work at home, with a weekly meeting via Skype, or a local drop-in office space. Heck, even a Starbucks location makes a pretty great meeting space and could save you thousands each month in overhead.

Of course some businesses have a real need for these types of offices, so I'm not suggesting that this approach will work for everyone. However, you may be surprised to see how well it could work for you.

Lease your equipment.

Purchasing office furniture, computers, and full telephone systems can get very pricy, very quickly. There are other options, equipment leasing being one. With leasing, instead of paying huge lump sums upfront for this sort of equipment, you can pay smaller chunks each month in order to maximize your cash flow. 

As most entrepreneurs know, a lack of cash flow can kill a business in a hurry. Consider renting your equipment rather than making the large upfront purchase for your office space.

Consider profit sharing, equity arrangements, and creative ways to pay employees.

For a startup with several employees, one of the greatest expenses each month is no doubt going to be payroll. While I'm not suggesting hiring cheaper employees, or underpaying for the ones you do have, it would be wise to work out a creative way to pay employees that doesn't detract huge sums from cash flow each month. 

Google, Apple, Microsoft and many other massive tech companies were all started by offering employees lower pay, but options to own a piece of the pie at a later date. Google - it's said - has more millionaire secretaries than any other company on the planet.

Hire directly out of college. 

From day one, it's unlikely that you're going to be able to afford that developer that used to work at Google and has 10+ years of experience. Instead, find college students, or recent college grads that are hungry for an opportunity and have less of a need for huge paychecks from day one. Of course, these loyal employees are going to expect to be paid what they're worth (either in direct payment or ownership options such as profit sharing or equity agreements) at some point, but by then you'll (hopefully) be profitable and able to pay at or above the market rate.

These four tips are just a few of the ways that your startup can "go lean" and become more efficient. While having more funding would definitely be nice, your business becomes infinitely more profitable once you have systems in place and a lean startup approach that doesn't require a ton of monthly capital injections in order to keep things running smoothly. 

Give this a try on your business, and report back with any additional tips that you may have in the comments.