Ask HN: Tips and Tricks to Save Money While Running a Startup | Hacker News Reader

Ask HN: Tips and Tricks to Save Money While Running a Startup

I'm talking about specific tricks, not generalities. I'll start things off :

Phone lines - Rather than setting up expensive business phone lines for all the desks in your office, use Skype. It’s free to connect with other callers within the Skype network or you can use SkypeOut to make unlimited domestic calls to those who don’t use Skype for $24 annually. Alternatively, MagicJack also lets you make free domestic calls on traditional phone lines. All you need to buy is the $39.95 jack, which plugs into your computer. After a year, renewal costs just $19.95.

Payroll - a tedious but necessary task. Rather than hiring someone to do this in-house, outsource payroll to services like paycycle.com and save both time and money.

Please add to this list.

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Live somewhere suitable for running out of your apartment - I rented a studio apartment two blocks off Newbury Street in Boston that doubled as my office. Had Japanese screens around my bed and a "war table" with whiteboard as the first thing you'd see when you walk in, second thing you'd see was my desk, a coffee table, couch, a second desk, a fireplace, and the screens just kind of blended in to the decor. My original goal was just to separate work space and home space visually for a professional appearance, but a few people commented they didn't know it was my apartment at first. It's surprising how possible this is to do - the extra couple hundred bucks to between Copley and Hynes-ICA instead of out of the city made a lot more people drop by when I invited them.

Then stock the place with enough coffee, tea, energy drinks, water, bread, cans of tuna, cans of soup, whatever that's fast and doesn't go bad so you don't have to go out if you're in a good flow. Instant coffee also potentially saves a hell of a lot of money if you're a coffee drinker and on a tight budget.

Edit: Another thought - if you wind up hiring any accountants or lawyers, be really, really cool with them. I remember I hired a lawyer to look at an important contract and I asked his secretary how he took his coffee. That combined with being friendly and gracious went a long way - we originally planned to go about an hour, we went two hours, then he only charged me for one. Very helpful guy, too. Being friendly, courteous, gracious, and doing little gestures makes people want to take care of you. When you don't have money, you have to think even more about being appreciative and putting your time to use for other people.

Most importantly, don't waste your time to save money. I'm getting gradually dragged -- kicking and screaming -- to the understanding that optimizing an expense below $100 is a almost always a terrible waste of my time.

(Thomas nearly had to smack me silly the other day when I was thinking "Hmm, I think I'll spend some time optimizing my use of Redis so that I still fit in a 1.5GB VPS." I was using 100MB for Redis and it was threatening to push me over the limit... but the next stage is only $ULTIMATELY_SMALL_NUMBER more per month.)

I have to wonder if I spend too much time reading comments here when I read a comment like above and think, "that's something patio11 would say" only to look at the name...

EDIT: Thought I should add something of value to the conversation... That is unless you are prone to spurts of procrastination. For me it's good to have things like this on my to-do list to keep me from doing something completely unproductive when I feel like procrastinating.

I have a nagging fear that someday people will discover I only know four things and a whole lot of ways to rephrase them eloquently.

If it is any consolation, this makes it five.

This is smart. Time and money are to some extent trade-offs. Joel Spolsky discusses this: http://joelonsoftware.com/articles/fog0000000056.html .

The real answer is that not every trade-off will be right for every person. Someone mentioned brewing your own coffee: that's probably smart. I'd get a Chemex and be done with it. Someone else mentioned having multiple people at the same desk. That would make me crazy: if I leave a paper or book or whatever on the desk, I want it exactly where I left. That seems like a false optimization to me.

Another example is office equipment. Getting reasonably good stuff is probably smart -- but buying new probably isn't. A lot of places have office liquidators; in Tucson, there's one named Andersen's that regularly advertises $500 Aerons on Craigslist. If you need a chair or desk, they're probably a good place to go.

This list can go on and on and on... the answer to the OP's question is just too often, "It depends."

* Use Google Apps instead of Office & mail server

* Use Google Voice as your primary number (lets go migrate from Skype to whatever without any headaches down the road)

* OpenDNS (more for the stats than the blocking/filtering capabilities)

* FreshBooks for invoicing and time tracking

* Yammer for inner-company communication (use heavily from start instead of IM/email, huge time saver)

* ZenDesk for customer support, if you're not using it by the end of the trial then ditch it

* Try Salesforce.com when you start pursuing sales, after trial runs up analyze what features you used to see if a free CRM (like vTiger) to see if free will be enough)

If you want to save money just...don't spend it. Adding some things that are not already here.

* You do not need to go to a Starbucks for every meeting.

* Until you reach profitability your time is not worth much. Apps that save you time are not worth paying for unless you spend that time pursuing profit.

* You do not need an office. Work from home. Work from a co-working space if you must.

* You probably do not need new technology. I still do everything from a 2 year old Dell (big mistake) that is falling apart. Likewise, unless you develop iPhone apps you do not need an iphone 4.

* If you are working from home you don't even need a smartphone. Prepaid is way cheaper. Way cheaper.

One point I disagree with is: * Until you reach profitability your time is not worth much. Apps that save you time are not worth paying for unless you spend that time pursuing profit.

Your time is always worth a lot, assuming you're productive.

My view is that if you're serious, get the best tools for the job, but use common sense. I've NEVER met a founder of a startup company run out of money because of apps or tools.

At my last startup we had a policy of "get whatever will help you be more productive, period". On average we spent 2k per developer upfront and about $500/year for apps and tools. That was for everything. Dev tools, office apps, services, books, etc...

One side benefit was that devs never complained about not having tool X and it generally helped morale, even more than free food (which actually costs more).

We're doing (or not doing) all of the above, except for the office. We tried the working from home thing, but the productivity drastically suffered. We realized it's better to spend a couple grand a month and have a place where everyone shows up everyday to work and our productivity shot through the roof.

This was, of course, for our team. YMMV.

Have you considered renting residential space instead?

Where I live, you could rent a 4 bedroom apartment for that kind of money

Watch zoning on this. A mean-spirited neighbor could get you kicked out and fined if you're operating a business out of a residential apartment. If one of you actually lives there you're probably safer.

Understand how much the time of each team member is worth. If your hours are worth $50, don't spend an hour trying to save $20 or even $45.

Which is the same as saying if you can spend $20 or even $45 to go an hour faster towards building your dream, go for it.

You can make personal decisions the same way. Just use an after-tax rate.

And no matter what the arena, avoid reducing your most important activities to some dollar value.

Still editing this list of things we've tried at Twilio, here's what I've got so far:

* Use the free version of everything, and when you run into the limitations tell the company you are working with that you are a startup -- they will likely make an exception for you, small businesses hold a place is many people's hearts

* Barter your time (instead of money) for things you really need, such as trading blog posts with a company you want to get free services from

* Become a customer of your customers - make non-monetary trades while you're both growing, because you have being cash-strapped in common (only do this within reason)

* DO NOT pay for a PR agency or do trade shows, find ways to hack these traditional promotional tactics (contact me if you want ideas, or check out constraintmarketing.com)

* Use GetSatisfaction for your online forums, the free version is pretty awesome. +1 Zendesk comment someone mentioned already

* Use Expensify for expense reporting (you'll need this as soon as you have your first sales/marketing type)

* If you have investors (even angels), try to get your investors to let you work out of their office space. Chances are they are on the road a ton and won't care

* When you're too big to borrow space, try a coffee shop that is dead during the day and make friends with the owner. They'll appreciate the regular business

* Coworking sounds expensive at "$500 a desk" but do it Hong Kong style, 2 or 3 people to a desk or coming in at different times during the day

* When you rent a space, try to get the previous tenants to throw in the furniture they're going to have to pay to dispose of anyway

* Don't do company credit-cards until you absolutely have to, the founding team should be willing to take the personal risk and be responsible for late fees (heaven forbid)

* Order promotional materials from Fedex or Office depot - a business account gets you 20% of everything. A single good-looking retractable standup banner looks professional, travels well, and lasted me over a year at our startup before we had more swag

* Pick ONE promotional giveaway item, make it awesome, and order in bulk. This will save you money long term, while still building brand, but don't both having pens, keychains, dongles, widgets, gadgets, etc. try just a tshirt

* set a travel policy about the cost of flights, and take public transportation instead of cabs. Remember, you are cash poor and time rich (sort of). Look for deals like the JetBlue all-you-can-eat or Virgin America $39 flights, snag them, and figure out who to visit at those destinations

* buy a coffee maker and those little K-cups from Bed, Bath, and Beyond -- you'll save a TON on going for Starbucks, both in time and money. In SF a latte costs $4!

* Strike up a regular "rate" with a single restaurant where you take all your clients, potential investors, etc. so that you can still treat them well but save 20-30%

and of course I have to say: * use OpenVBX to set up a business phone line with a simple menu that forwards to various cell phones "press 1 for support, 2 for sales, etc." and only pay for what you use

When you're too big to borrow space, try a coffee shop that is dead during the day and make friends with the owner. They'll appreciate the regular business

Also try libraries. They have free internet access and have conference rooms you can use for meetings, sometimes for free.

Buy bottle opener usb disks in bulk :)

yeah Mashery does this and it rocks

It's not all about saving money. Customers want to feel that you are successful before they Buy your services... So spend money and look successful when it matters.

Use thepiratebay. But you probably already do. Set deadlines! People don't work well without deadlines.

Sorry, that's horse shit. Pirating software to make money is the epitome of hypocrisy. If you need something for your startup, buy it.

Pirating it outright is straight up bad for you and for your startup. If you are successful, someday you might have employees. How can you get any respect from anyone if you tell them to load up a pirated copy of something. Even if not, self respect is an important thing (even if subconsciously). If you know you're cutting corners, you'll end up be less motivated to follow through on things.

Whatever, just dont do it. It's stupid.

If you need it and it isn't free, buy it. If you can't afford it you either don't actually need it or should find a free alternative.

So you are advocating using pirated software to build other software that you then will want people to buy?

Pirating software is morally wrong, and it is a crime.

No. Black and white. Sorry.

No. Pay for what you use or find a cheaper alternative.

We do use TPB. What do you use it for?

Edit: Don't know why people are downvoting, but to clarify: I wasn't sure if jeb was using TPB for the same purpose as we are or if he was suggesting TPB as a way to take a break (movies, music, games etc)

When I had no money, I'd get even $20 software off there. Now I buy $20 software, but I get $900 software off there. In the future perhaps, I'll buy $900 software.

Yep, thats us as well. We currently pay for software thats in the ~$100 range, but hope to pay for $1000 software in the future.

What Software do you need that costs money?

Adobe :-/

What apps? I use Pixelmator instead of Photoshop and its got a better UI and exports to PSD for my slicing service.

Tried out different apps to replace Photoshop; Pixelmator, Acorn, DrawIt and Phoenix - but none gave me as good workflow.

Pixelmator did not have Layer Groups, Layer Styles or vector Shapes when I tested it. Does it now?

Two things cost a lot. Salary and rent.

Work from home. If you work with a team use Talker and Teambox.

Don't pay yourself as much as you normally would until you reach profitability. If you work from home this shouldn't be a problem. You may end up saving lots of money this way.

While I agree that salary is a huge expense, rent is usually a small fraction of the salaries being paid.

In my experience, teams who work from home for an extended period of time can start to lose focus and productivity. This means it takes longer to build your product, and you end up paying a lot more in salary.

By having an office (usually only a few hundred, to a few thousand dollars a month in expense), you are able to save a lot in salary (tens or hundreds of thousands of dollars a month), because your team will be more focused and productive.

True. There is a point where offices become useful. Early early stage offices ARE a huge expense and should perhaps be avoided.

I agree with dougludlow and AlexBloom wholeheartedly. It's more a matter of where you are at in the development of your project and/or if you need co-workers at all.

Yeah, and instead of getting an office, work from a co-working space. You get many of the benefits: everyone is in the same place, space to meet, whiteboards to brainstorm. On top of that, you get to be around a bunch of smart people who will be great resources.

Personally, our way of saving money is to pretend that we didn't have any money, especially when we were still building the product.

Scenario 1: we once thought we needed more developers to build our minimum viable feature set "on time." Since we pretended that we had no money (which isn't far from the truth anyway), we worked on improving our productivity, doing away with fluff features, and eliminating all non-productive uses of our time. That has helped us tremendously both in terms of building a product that is easy to understand as well as enhancing our work ethic.

Scenario 2: time to get some Beta users. If we weren't treating money in the bank as hands-off money, we would've splurged on some AdWords (which may or may not help us get the users we want). Instead, we worked with no cash (literally zero dollars) and tried to acquire early users using the basics: direct marketing, inbound marketing, social media activity, etc. That forced us to be creative.

Fundamentally, the best way to save money is to deceive yourself, as best as possible, that you have no money to spend -- that it's hands-off money, unless the company absolutely, absolutely needs the money and there is no other alternative. We had alternatives, so we skipped the spending. Not saying that this approach is optimal, but it sure keeps cash where it belongs: your bank account.

Collecting the money from customers is often a challenge. You need to be friendly with your customers so they continue to order, but you also need to be firm so that you get paid in a timely manner.... Its a hard balance.

I know a small business owner who has a mythical staff member called Tony. Tony collects the money by being a pitbul...this is very successful as it allows the company owner to do what he does best and he leaves the mythical Tony to chase the money.

I use a professional call answering firm to answer my calls, it's not cheap but it makes my business look bigger than it is.

Do you delegate any decision making authority to them, or do they just take messages?

They just take messages and pass the details to me by email, SMS or in emergencies they call me.

They have a great system. My calls (around 5 a day) are usually answered by the same lady. She answers calls for around 30-40 other companies so she cant remember individual callers. She uses caller ID and software on her PC prompt her. So for regular callers she can say "hi Pete, how are you? How are the kids? Did you like your holiday? The reception is much better tis time....let me try to put you through to the support department....".

Fantastic!

don't spend money on advertising. instead use social media, blogging, word of mouth, add pro-viral features, pitch in comments in web forums or others blogs, cold call prospects, etc

Understand the difference between being frugal and being cheap. Example...

Frugal: "Let's buy these computers when they go on sale."

Cheap: "Our engineers can do with a ten-year old desktop with a 533 MHz Celeron processor."

The sad thing is that I'm only half exaggerating.

One nice thing my company is using skype for is internal communication.

We have simply setup a groupchat and added everyone in the company.

We have tried almost every other interpretation of an internal network. This one just works.

Open source and a Google Apps is a gift.

Don't install Exchange. OMG.

Just because an item is "business deductible" doesn't mean you should buy it. At tax time, you'll probably only get back .30 cents on the dollar for the purchase anyway.

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