Posts tagged app maker

Unless you’re fabulously wealthy or recently landed a large investment, your startup is going to have to run on fumes for a while. The tips below will help your startup run more like a Prius, and less like a Hummer:

Don’t be afraid to charge for your product

While we’ve all heard of startups with zero revenue being acquired for boatloads, the fact of the matter is these companies are the exception and not the rule. If you’ve decided to bootstrap your startup, the most crucial component of your success is focusing on generating revenue from day one.

The best way to go about this is to get your product into the hands of your target customers ASAP. Listen to their feedback and tailor your product around it. Find ways to provide real value to your users and don’t be afraid to charge in return.

For our first 100 clients or so, we went above and beyond to get them to pay for our product. Even though our service was "do-it-yourself", we bent over backwards with account customization and it paid off. Not only did it help improve our product, but we gained invaluable feedback along the way.

Don’t spend a lot on office space

You may have had vivid dreams of a Midtown address and an office in the clouds when you set up your first lemonade stand, but here’s your reality check: aside from payroll, rent is often a company’s biggest expense, and is a great way to blow through your meager funds very quickly.

Nothing shortens a runway like excessive rent.

The first office space we ever rented was a single room, $400/month, and ended up fitting 10 people by the end. It was an experience similar to living in a crammed dorm room, for better and for worse. The working conditions were far from ideal but I can’t think of a better way to bond with your cofounders, stay focused, and motivate yourselves to work your way to a nicer working environment.

Don’t spend a lot on server space

One day you’ll dominate the Internet and have a trillion users. Today, however, the only visitors to your site are you, your cofounders, friends, family, and if you’re lucky maybe a couple hundred users.

For dollars a month, you can usually cover up to a few thousand users by utilizing readily available cloud hosting services or simple shared hosting plans. Primarily, you only need your site so that you have an environment in which to upload and test your product, so why pay for bandwidth you don’t need? Stay lean, and when your user base increases, scale up appropriately.

Take advantage of free SaaS products

There’s too many free awesome SaaS products out there to count but here’s a few we use in our company and I highly recommend using for yours:

- WuFoo for front page lead capturing
- MailChimp to enable automated email campaigns
- Recurly for recurring subscription billing
- Vimeo for hosting recorded tutorial videos
- Desk for customer service and helpful tutorial articles

We’ve utilized these tools from the beginning and we’ve been able to scale as we grew. The costs today are still minimal and well worth the price paid. These tools can work together and help you build a sales funnel, keep support to a minimum, and market to your customers on the cheap.

Don’t spend a lot on office furniture

You won’t be receiving any foreign ambassadors any time soon, so let it all hang out. Walmart and Craigslist are your prime sources of furniture and equipment. You just need functional items for now – you can worry about style later (if you get there).

I understand, however, if you spend a little bit extra on your chair and I highly recommend this purchase if anything. You’ll be in it for hours upon hours, after all. In our early days we had comfortable chairs but literally had $30 folding tables as desks. We didn’t care and they got the job done, which is all that mattered.

Don’t spend a lot on office supplies

You probably can’t afford a Starbucks addiction. If you need coffee, make it cheaply in the office using discount grounds. Trips to the coffee shop or to grab energy drinks from the store eat up a surprising amount of time and money, and there’s no room for that when you need to conserve resources and get your product off the ground.

The Bizness Apps team ran on Crystal Light Energy in the early days. It’s a highly affordable drink powder that you can mix up anytime with water for a quick pick-me-up. Also known around our office as: the poor man’s Redbull.

Don’t have a monthly cell phone bill

Google Voice, Skype, and even MagicJack are all inexpensive, practical communications solutions for startups. Call quality is sometimes compromised, but you’ll save hundreds (if not more) each month. For a startup that has $50K to spend, saving $10K on phone bills can make or break your company.

During our early days we spent our time cold calling potential customers on the MagicJack phone systems. The only positive thing I can really say about MagicJacks is they make phone calls and are extremely cheap. I’d probably go with one of the newer VoIP services now. But my point is this is a huge opportunity to save costs, especially if you’re not going to be making very many calls.

Don’t spend anything on marketing

Focus on organic SEO tactics and avoid pay-per-click campaigns for now. More importantly, try to get some press going (favorable press, ideally). A writeup in a major news outlet can sometimes be the spark to start your company’s fire.

Of course, without a decent product, all the marketing in the world won’t help, so if you have to choose between working on product quality and pursuing marketing channels, favor product every time. In fact, that’s what most of this list is about. The more money you save on your various expenses, the more you have to spend on product development, which is the key to a successful startup.

Don’t hire for sales until you can pay with revenue

The process of attempting to get people to pay for your product is invaluable learning experience. Don’t skip it. Once revenue is coming in and you know how to sell your product, you can hire a sales team to help you increase the volume of your sales efforts, as opposed to figuring out how to sell a product you designed with only meager input from prospects.

We didn’t hire anyone for sales until we thoroughly understood our target market, sales process, and had actual paying clients. I think this part is extremely important because as the head of your company, you’re best suited to tailor the initial sales process and pass this along to your first sales hire.

If you can’t sell your own product, then it will likely be even tougher for others. Always be closing!

To sum it up, the two major goals when running a company on a shoestring budget should be to generate revenue from day one and save costs. Your biggest costs when first starting are office space, payroll, server costs, development, marketing, and office supplies. Focus on product and building something of value for others. If you can keep costs limited to only what you actually need, you can easily make $100K last a year and hopefully get your business to the point of being “Ramen even” or even profitable.

That’s what we did and I wouldn’t change the experience for anything in the world.

Andrew Gazdecki is the founder and CEO of Bizness Apps, a do-it-yourself mobile app & mobile website platform for small businesses and Bizness CRM, a CRM designed to make selling to small businesses easy.