A startup begins with four concrete pillars namely Manpower, Machinery, Money and Market. The big challenge for any entrepreneur is to decide which of the four segments should be taken care of primarily and which should be considered later.
The situation might become critical when the entrepreneur is already left with limited funds and the business is yet to start and generate revenue for him.
Let us discuss in detail what factors should be taken on priority and which can be skipped for some time while you are setting up your new venture.
You cannot initiate the startup unless you have all essential functions and services ready for business. So, you need to begin with setting up the quintessential utilities in appropriate places.
By this, I don’t mean only furniture and stationary fixtures; rather a complete workspace, facilities and aesthetics from a larger viewpoint. Obviously, the level of involvement varies with the business industry.
If you are planning to develop some customer oriented business, a prime workplace and aesthetics are vital for your startup. You need to be very specific about the location, office building and its interiors.
This can materialistically become a costly proposal for the business owner; especially at the early stages and worse, if you do not have any benchmarks to help you estimate your business dimensions in terms of cost.
So, we recommend the mapping and inclusion of such costs from the very beginning as they offer quick and easy access to your customers. Market Research Processes are additional costly activities that cannot be skipped.
The tools and machinery work as the backend service provider for any business. The production part is mostly done by machines and you cannot avoid the equipment cost for any startup.
Once again, it does not necessarily mean those heavy machines; it can also include the computing equipment and supplementary apparatus that supports the parent business; directly or indirectly.
Take any IT/ ITES firm for example. They usually spend more on high speed computers or laptops and genuine technology as compared to a smart and nice looking office.
Sometimes, the process to change the business dimension is only limited to changing the product. And therefore; all you need to replace is the equipment. The same office location and workforce can be used for new product.
The recruitment of apt staff for a business might look like a huge cost however; from some people’s view, it is more of an investment, and the workforce provides the ultimate service or experience to the consumer.
You might need to pay a little more to attract suitable people in the initial stage of your startup however; later the cost will reduce as you build a reputation in the market because of such people.
Training and maintaining the workforce will still be one of the most costly functions of any startup. You wouldn’t want your staff left behind, especially when similar people in your industry are evolving themselves with the time.
Be it the Food and Beverages Industry or the Information Technology Sector, the basic raw material is the brain power and you cannot compromise on that if you are looking forward to build a status in the market.
Irrespective of where you work and what kind of customers you have, your staff must be fit by all means. You might need to avoid some secondary costs but you cannot work well with incongruous workforce.
Generally, we interpret marketing for vigorous promotional activities and sales force struggles however; during the nascent stage of a startup, it is more into research work and the formation of a business strategy.
At this stage, the startup actually decides on its market space and designs policies on how to target consumers which helps the business obtain the correct action plan and commitment level from the very beginning.
Another considerable aspect under this segment is the advertising cost pertinent to your startup. You can start rolling out money only if your business is already recognized in the market and can draw customers towards it.
To rationalize the marketing and advertising costs, you must cut down the excess embellishments. Getting personal with consumers and addressing their demands unswervingly is what effective marketing is all about.
You cannot have a perfect sequence of costs applicable to every startup. What is vital cost for one business, can be avoidable for other. The diversity in the costs is purely dependent on the characteristics of the business sectors.
And therefore, in order to prioritize your startup cost, you must do the following in right order.
- Research about the most essential element of your business.
- Map various functions for that element and mark the cost.
- Allocate the funds required to this cost section
- Look out for the next significant component and repeat step 2 to 4.
You can search for the freebies you can get from government and cultivation systems, yet it is not advisable to avoid spending on such crucial requirements, because your startup is based on them.
A very fine example would be choosing an expert worker (who can grasp your strategies quickly) over a nice office furniture set. Definitely paying the person little more and using old furniture longer is a smart choice.
The Bottom Line
You must proceed with the essential costs and see how you can reduce your expenses by integrating cost saving measures. Always keep listing costs and ways you can cut them down.
And when your business starts spinning in the right direction, you can concentrate on the sections you had initially avoided. This will eventually give a full form to your startup where all essential requirements will be taken care of and none of the departments are left cash starved.