What’s a Typical Subscription Commerce Retention Rate?

Cocoa Subscription Box

What’s a typical retention rate for a subscription commerce business?

If you’re trying to model a potential new subscription box business, or just wondering how profitable an existing business is, retention rate is a key variable. What retention rate should you assume?

The answer, of course, is “it depends.”

But you need something to plug into your calculations. So let’s look at some potential comparables.

Retention Rate Comparables

Here’s some retention data that has been shared publicly:

(If you know of some other good public data, please let me know — this sample is a bit limited at the moment!)

Why Churn Rate Tends to Decline Over Time

If you look at the H.Bloom and Relay Foods examples, you’ll see that lots of subscribers cancel early in their subscriptions and the remaining ones tend to be more loyal. I’d expect to see this in most subscription businesses — customers that aren’t getting value from your service are likely to leave early on. Those that remain are likely to be doing so because they like the service. Consequently, as your business matures, your overall churn rate is likely to fall.

Churn Rate Varies by Acquisition Channel and Offer

You will also find that your churn rate is affected by how people sign up. At Boudoir Privé, for example, we found that, when we ran a special offer giving a discounted first box, a lot proportion of those new subscribers cancelled after they’d received that one box.

Churn Rate vs Retention Rate

I’ve been talking about churn rate and retention rate. But how are they related?

Churn rate is the percentage of subscribers who cancel in any one period. e.g. if you have 100 monthly subscribers and one month 20 of those subscribers cancel, then your churn rate for that month is 20%.

Retention rate is simply the percentage of subscribers who remain. In the example here, 80 subscribers remain and your retention rate is 80%.

retention rate = 1 – churn rate

Modelling Retention Rate for Your Business Plan

In my opinion, simple is good where possible. And I think that applies to modelling retention rates and churn rates for subscription commerce businesses.

Here are a few models you may want to use:

1. Average subscription length: Probably the simplest model (and my favourite for back-of-the-envelope calculations) is to assume an average subscription length and not worry about the details beyond that. This is good for estimating whether or not a business is likely to be profitable.

2. Fixed churn rate: To model cashflow, you’ll need to look at retention over time. One simple way is to assume that a fixed percentage of your overall current subscribers will cancel each month.

3. Declining churn rate: A slightly more complex model is to assume a slightly high overall churn rate to start with, dropping gradually over time.

Any of these approximations is probably fair for a pre-launch business where there are large amounts of uncertainty about other key factors of your model anyway.

More advanced businesses with a better idea of their numbers (or early stage ones run by ex-investment bankers) may want to look at a cohort analysis to better predict and model how the churn rate for a particular group of customers is likely to change over time.

Your assumptions about future retention rates significantly affect how profitable a business looks in the long term, so whatever approach you take, it’s worth understanding this component of your model and any simplifying assumptions you’re making.

How about you? Are you trying to model retention rates for a new business idea? What approach are you taking?

Update: you may also like to read this more recent article: What is the Average Churn Rate for a Subscription Box Business?

For more information about starting or growing a subscription commerce business, have a look at Subscription Commerce Insider.

Read More

How to do Video SEO

The latest Grovo ‘Expert Series’ video is an interesting one. Tom Critchlow is an SEO expert and talks through what you need to know about video SEO. (And he’s a Brit, too, which makes a nice change!)

Here’s the video series.

There are 13 snippets to go through, so it takes a while to watch. If you don’t have time, here are my notes:

Context

  • Video is becoming increasingly important.
  • Now’s a good time to get into it.

Choosing Subject Matter

  • Think about who your audience is and what they’ll be interested in. Talk about something you know a lot about.
  • On YouTube, people are typically searching for information – researching and asking questions rather than looking to buy something.
  • Look on Quora or Yahoo Answers for an idea of what things people might be searching for and what terminology they’re using.

How to Create Your Videos

  • Just dive in. Don’t worry about optimisation to start with.
  • Include a call to action; tell people what you want them to do.
  • For B2B marketing, you may want to put the video behind an email opt-in.

YouTube or Self-Hosting

  • If just dabbling, host on YouTube. If looking to invest seriously, use something like Wistia, Vimeo or Vzaar (more features and better analytics).

YouTube Basics

  • Have a good title and description. Use YouTube Keyword Tool to find out what people are searching for.
  • Make it public.
  • Allow comments.
  • Make sure you have an umbrella account that the videos are posted under.
  • Try to build up a group of followers. Ask people you know to Like and comment on your videos.
  • Make sure the description encourages people to watch the video.
  • If you want to drive people back to your site, include your full URL in the description.

Advanced YouTube Tips

  • Upload captions (use CaptionTube) — helps video indexing and discovery.
  • Use your target keywords in the filename you upload.
  • Make sure you get people to watch the video all the way through.
  • Engage in the YouTube community.
  • Use YouTube annotations for call to actions, but don’t make it too spammy / intrusive — try to provide value for the user.

Self-Hosting Basics

  • Tom recommends Wistia.
  • If self-hosting, you should create a video sitemap.
  • Wistia does this for you automatically (their killer feature).
  • There are no great tools for doing this, apart from Yoast’s video SEO tool (WordPress-only).

Advanced Self-Hosting

  • Use schema to mark up your video (VideoObject).
  • If you’re getting really serious about video, consider doing transcriptions of your videos. Post transcription along with each video.

Getting Distribution

  • 100,000 views is achievable.
  • It’s often easier to get a blog to embed a video than to link to it elsewhere.
  • TubeMogul can be useful for getting maximum views.
  • Google is getting smart at spotting duplicate videos.
  • If you want SEO value of ranking for a particular phrase, self-host and don’t use TubeMogul.
  • If you’re pushing a viral video, paying for initial views can work well.
  • StumbleUpon advertising can be effective for viral/funny content (especially if video autoplays).

Video Linkbuilding

  • Have embed codes that link back to your site (you can tweak the YouTube embed codes).
  • Can work well to include the video in a press release (either embedded or linked-to).
  • People will often link to YouTube rather than your site. To counter this, have some related resource on your site and encourage people to link to it (even if they’re also linking to YouTube for the video). If people don’t link to your resource, follow up with them and ask them to do so. News organisations generally won’t update articles, but bloggers will.

Link Outreach

  • Carefully craft your content with a particular audience in mind.
  • Contact people in a friendly way to see if they’d be interested in your content.

Video Analytics

  • YouTube Analytics show you lots of good information, e.g. when people tended to stop watching.
  • SEOMoz’s Open Site Explorer is good for seeing your backlinks. You need to register for a free account to use it.
  • AuthorityLabs tool has icons that let you see if videos are ranking highly for a given keyword phrase. If they are, then the phrase may be a good one for you to target with a video (Google thinks videos are a good thing to show for that search phrase).

Case Studies

  • SEOMoz Whiteboard Friday
  • Zappos are pushing the envelope for video SEO in e-commerce by having 50,000 product videos like this one. Note that the videos are on the relevant product pages, so it’s perfect if someone clicks through to the page from a search result.

 

Read More

Comparing Payment Gateways and Merchant Accounts

PaymentBrain logo

Working out how to accept payments online is a pain. What do you need, exactly? Which payment gateway should you choose? How much will it cost?

I’ve set up a few online businesses now, so I think I have a pretty good idea of it all, but I remember how confusing all this payments stuff was to begin with.

What’s so Hard about Payment Processing?

When it comes to payment processing, there’s lots of terminology to get your head around (PCI, chargebacks, 3-D Secure, IMA) and dozens of factors to consider (security, shopping cart compatibility, support, retention periods).

Even when you understand it all, it takes ages to dig out relevant information about the different providers. And if you’re getting a merchant account you really need to shop around and play different providers off against each other to get good rates.

Does it Need to be so Hard?

Taking payments really shouldn’t be this hard. But no-one seems to be doing much to help UK merchants figure all this stuff out. The best resources I’ve come across are some excellent blog posts by David Mytton and Daniel Tenner.

So I’ve decided to have a go.

Introducing PaymentBrain

I’ve set up a site called PaymentBrain as a home for resources to help UK merchants choose online payment solutions.

So far, it’s hosting my first stab at a comparison engine to compare payment gateways. I hope to be adding and improving upon it as time goes by.

If you have a friend who’s planning to apply for a UK merchant account in the next few weeks, please put me in touch. I’d love to chat with him or her about it and to share what I know.

Thanks!

 

Read More

How to Build a Successful Startup – an Interview with David Tisch of TechStars

It’s 11.38pm as I’m starting to write this, so I’ll keep it brief.

The latest startup interview from Grovo came out today. It’s with David Tisch who runs the TechStars incubator in New York.

David sees lots of startups from an early stage, so has an interesting vantage point on things.

Here’s a quick rundown of the more actionable highlights from what he had to say…

Founder/product or founder/market fit

This is one of the things David looks for when selecting startups for TechStars. You need at least one of the following:

  1. Direct experience of a pain point in the space
  2. A thesis on the space (how the status quo is broken and how things will look in the future)
  3. A network within the space that gives you an unfair advantage over other people

The actionable takeaway is this: when choosing a business to start, find one where you have at least one (preferably two or three) of the advantages above.

Personally, I agree with 1 & 3, but I’m not sure about the existence of a thesis on the space as a useful indicator of ‘fit’. For example, I have a thesis about the future shape of the National Health Service (NHS) in the UK but as I’ve never worked in that sector, it’s very likely my thesis is wrong in important ways.

Storytelling

David argues that storytelling is the number one skill you need to learn as an entrepreneur. You need to be able to express your story in an exciting and engaging way. e.g. why are you doing this, what hiccups and successes have you encountered along the way. This isn’t just important when speaking to investors (like David) but to everyone: journalists, customers, potential hires, etc.

Marketing

As a startup, David recommends experimenting wildly and widely with your marketing (at least, I think he’s talking about marketing when he mentions this). Test as many things as you can and see what sticks.

I’d agree broadly with that. Though in reality, limited time and money generally mean you have to be selective and prioritise testing the handful of marketing techniques you think are likely to work best. This is one area where I think experience can be very valuable.


The rest of the interview is more focused on TechStars and New York. You can see it all here.

Read More

How to Publish and Sell by Email – an Interview with Ben Lerer of Thrillist

I told you about an interesting interview with the Bonobos founder last week on a site called Grovo. Well, Grovo’s next interview with a founder of a successful Internet company is now available and it’s another good one.

This week’s interview is with Ben Lerer, the co-founder and CEO of Thrillist, a daily email city guide with over three million subscribers. Thrillist also owns JackThreads, a members-only online retailer, and Thrillist Rewards, a ‘localised commerce business’.

It’s interesting to hear Ben’s perspective on his large, email-centric businesses.

A few key points for me were:

  • For Thrillist, the daily emails are the full content; for JackThreads they’re about merchandising – showing people a curated set of products that they will hopefully go and buy on the site.
  • Currently, everyone gets the same emails. Over the next year, they’re planning to start personalising the JackThreads emails so the stuff you’re shown will tend to be more of the things you’ve indicated an interest in (I’m assuming this’ll be based on actions like clicks and purchases.)
  • Ben sees fast iteration as key. Over time they’ve become better at the try / monitor effectiveness / make changes cycle.
  • Building a brand online is about: knowing who your audience is, being consistent, and being authentic. They use an honest, slightly irreverent tone.
  • Over time, they’ve moved away from building ‘what Ben wants’ to letting the data drive things.
  • Having this kind of data-driven approach is important.
  • With the e-commerce business, the numbers are very specific (sales, profits, etc.); with the publishing business, they’re fuzzier.

The interview is here.

I’ve enjoyed this interview series so far, so I’ll be continue to follow it. If there’s an interview I think is particularly good, I’ll share my thoughts about it with you here.

 

 

Read More

Google AdWords Fooled by Scammers

Google AdWords has revenues of $30 billion or so a year. With that sort of money involved, you might think the AdWords ad review system would be pretty good.

It seems it could still do with a bit of work.

One group of scammers has been fooling Google for at least 6 weeks now.

I first noticed their ads on new year’s eve. They were tricking Google into running ads that looked to be for the Daily Mail. When clicked, the ads took you to a page that tried to trick you into buying an overpriced subscription. I later discovered (here) that the scam ads had been running at least since 12th December 2011.

Incredibly, the scammers are still getting away with it. The latest ad I’ve spotted appears if you search Google.co.uk for “anti-ageing cream”. Now the ad claims to be for iVillage:

Rather than take you to iVillage, though, the ad takes you to the same scammy landing page as with the previous ‘Daily Mail’ ads (though on a different domain now).

This kind of thing makes my blood boil.

These scammers are, sadly, conning a lot of people out of money.

I’ve reported the ads to the Google AdWords team, so hopefully they’ll stop them soon.


Read More

How to Build a Fashion Brand Online (According to Bonobos)

I came across an online education website called Grovo this evening. Perhaps you’ve heard of it already?

Grovo has lined up a series of what promise to be interesting interviews with successful figures in the world of online business. Their first interview (and only one for now) is with Andy Dunn, one of the co-founders of Bonobos which is a very successful men’s fashion brand in the US that was launched via the web.

In the interview, Andy offers some fascinating advice about doing the kind of vertically-integrated retail that has worked for Bonobos. He sees personalisation and curation being extremely important trends that will improve the online shopping experience.

In case you don’t have time to watch it, here are my notes:

Building a Brand Online

Four keys:

  1. Aggregate customer service to one point and staff that well (the “Zappos model”).
  2. Have a high-quality product.
  3. Vertically integrate so that you look after sourcing, design and merchandising.
  4. Get great at brand story-telling.

Customer Acquisition

Early phase: use word-of-mouth, editorial/PR and direct-selling; get up to a run-rate of $1 million to $2 million (!)

Growth phase: multi-channel (test everything and use what works best). Requires:

  1. Culture of analytics and experimentation
  2. Money to run the tests
  3. Understanding of your customer lifetime value (LTV)

Differentiation

  • Bonobos have differentiated through their vertical integration into design (starting with better-fitting men’s trousers, now expanding into other garments).
  • They focus on serving a specific demographic really well: 25-50 year-old active, urban, professional males.

Leveraging Social Media

  • Have a conversation (don’t just talk at people)
  • Use social media as a channel for real-time customer feedback
  • Be hugely responsive on social media
  • Use social media to let customers and your team connect on a human level (e.g. Bonobos ran a poll to ask customers to vote on which Bonobos team member had the best Halloween costume)

Evolution of Commerce

  • Think of the online experience as a bundle of product and service.
  • Be a great storyteller.

I love what Bonobos have managed to do and I think there’s lots to learn from their success.

Grovo have done a great job with this interview, so I’m looking forward to checking back with them soon.

I’ll keep you posted here with any interesting notes.

 

Read More

How Google Suspended My AdWords Account Forever (With No Warning)

Stay Classy Mr. Top Hat

I want to like Google.

They have all those free services: search, Gmail, Analytics… what’s not to like with those?

And I’ve been a customer of Google’s for a long time, too – spending money on their AdWords ads since February 2007.

Google does a lot of good things and I’m sure most people who work at Google are good people.

But the way Google’s UK & Ireland AdWords team has treated me in the last 4 weeks has made me realise that all is not well at Google. In fact, it’s very dangerous to rely on them in any way.

Google Permanently Suspend My Account With No Warning

Four weeks ago, I’d created two AdWords ads. They’d been shown a grand total of zero times.

Then I realised the ads might both be in violation of Google’s ad policy. Not wanting to violate that policy and preferring to play it safe, I cancelled one of the campaigns. And I tried to cancel the other one.

I didn’t intend to break Google’s rules. I made an innocent mistake and tried to correct it as soon as I could.

At this point, I assume Google looked at my ads and decided they did indeed violate their policy.

Fair enough. [though I’ve subsequently reviewed their policy and can’t see any way the ads were in violation. From what I gather, Google AdWords penalise anything that looks like affiliate marketing, though don’t make this at all clear in any AdWords policy documentation I’ve managed to find.]

Next, though, instead of alerting me to the fact that my ads were against their policy and not running them, Google decided the appropriate course of action was to permanently suspend me from using Adwords. Forever.

What?!!

“Not to worry,” I thought. “Those folk at Google are smart and reasonable. When they hear what’s happened, they’ll realise a permanent ban was a bit heavy-handed and re-enable my account.”

I Try to Contact Google, but am Ignored

So over the course of the next several weeks I politely tried to reach out to Google’s UK & Ireland AdWords team.

I called them. I wrote to them. I wrote again. And again. In return, when they did reply, all they did was to send me template emails that completely failed to address any points I’d tried to raise.

I did speak to an AdWords customer support person on the phone at one point. They were friendly enough, but their only authority seemed to be to pass on a message to someone else. Nevertheless, I hoped this might do some good. A few days passed. Then I received it … yet another template email. Grr.

I filled out their online complaint form, asking for a more human interaction. Again, nothing but a template reply.

Google refused to engage with me in any meaningful way.

Charming, Google. Truly charming.

Barred from Accessing 91% of UK Search Traffic

Google have now barred me from accessing 91% of the UK’s search traffic with paid search. And they don’t bother to even properly respond to my queries about it. Great.

I used to test lots of business ideas by running small Google search ad campaigns. Now I can’t.

Google’s UK and Ireland AdWords has refused to discuss why they’ve taken this action. I suppose this is always a risk when a company has the kind of dangerously dominant (*cough* monopolistic *cough*) market share that Google currently enjoys.

I know there are good people at Google; people who want to do the right thing. Sadly, Google’s policies no longer seem to be letting them do that. Now when I call customer support, the people I speak with tell me that there is nothing they can do: the policy people have spoken and they must be right. It’s like some kind of Orwellian nightmare in there, with policies in charge rather than people.

Google Favour Large Businesses Over Small Advertisers

What’s especially galling about this is that Google don’t treat everyone the same way.

Google treat larger customers with more respect.

I used to work for a company that was (and still is) an extremely large AdWords buyer. When they screw up, it’s a different story. A quick word with their account manager and Google turn a blind eye. Their account isn’t suspended. They don’t have to wait days for a response. And they don’t have to put up with condescending template emails.

It’s the small guy that gets the raw deal. It’s the small guy who gets penalised for an innocent mistake, then ignored by Google.

What Next?

If you work for Google: we both know your organisation can be better than this. Let’s sort this out. You can contact me here.

If you don’t work for Google, please warn your friend about the reality of AdWords:

Your AdWords account may be shut down permanently at Google’s discretion at any moment without any warning or explanation and with no way of speaking to Google about the decision.

Do you really want to be at the mercy of an organisation that treats its paying customers like that?

Further Reading

Creative Commons License photo credit: airinnajera

Read More

The Rise of Subscription (Cheese) E-Commerce

Cheeseboard and cheeseknife and cheeses

There’s been a lot of interest in the subscription e-commerce business model lately. It’s a model that I think is particularly powerful.

Getting Someone to Buy is Hard

Anyone who has run an e-commerce website will tell you that getting a website visitor to buy something is hard.

Think about what’s involved:

First, you have to get them to your site (often no easy feat in itself).

Next, you need to explain your product and service in a clear and compelling way.

Then, you must reassure them that your website is a safe place to buy something.

Even if they’ve stayed with you this far (and most won’t have), there’s still a good chance they’ll abandon their purchase part-way through, leaving you in the dark about why – perhaps their friend just called; maybe they fired up Amazon to see if they could get your product cheaper elsewhere, then got side-tracked into buying the latest DVD boxed set; or they might have just changed their mind.

Put all this together and you can appreciate why, on average, only about 2% of visits to a typical e-commerce website result in a purchase.

Subscriptions to the Rescue!

Subscriptions are powerful because, with them, you only have to get each customer through that difficult funnel once. Then it’s up to you to provide a wonderful service. As long as you do, your customer will, more often than not, remain subscribed.

Six UK Cheese Retailers can’t be Wrong

What’s that? You don’t believe me that subscriptions are powerful?

It turns out I’m not the only person to be keen on subscriptions. UK cheese retailers seem to be particular fans. Incredibly, there are now at least six subscription e-commerce cheese services in the UK alone:

1. Pong

2. Norbiton Fine Cheese Co.

3. The Cheese Yard

4. The Cheese Gig

5. The Corbridge Larder

6. The Cheese Shed

What could You Sell by Subscription?

I’ll be interested to see where this trend of subscription e-commerce goes over the next year or two. With the emergence of technology making it ever easier to launch subscription e-commerce services, I expect lots more things to be tried. Who knows… perhaps there’ll even be more cheese subscriptions on offer.

What do you think about the recent interest in subscription e-commerce? How far will it go? And what would you like to see sold by subscription?

 

Creative Commons License photo credit: Ben Sutherland

Read More

Startups: 23 Ways to Save Money Without Cutting Corners

You’ve started your business, but money’s tight. You haven’t got much cash to play with.

Here are 23 tactics you can use to be frugal and save money:

1. Use Lean Startup Methodology

Red-eyed fly
Creative Commons License photo credit: quinet

Make sure you’re building something people want and will pay for. Don’t spend time and money building it before trying to find out. Talk to them first and make sure you understand the problem you’re trying to solve.

This is one of those things that sounds obvious, but that most people only really learn too late. Read more here.

2. Use Quick and Dirty Prototypes

Final Countdown!
Creative Commons License photo credit: juhansonin

As part of the Lean Startup ideas above, test out your ideas and assumptions with potential customers. Consider using Powerpoint slides to describe your ‘product’ before you build it.

3. Build a Minimum Viable Product, Nothing More

Paperclip Trebuchet
Creative Commons License photo credit: robad0b

To start with, build a minimum viable product (MVP) — be ruthless about leaving out everything that you possibly can.

4. Keep it Simple


Creative Commons License photo credit: dno1967b

The fewer the features you try to build and the simpler you can keep your business, the faster you can move and the cheaper it’ll be to run.

5. Don’t Hire Until You Have To

kors oversized
Creative Commons License photo credit: Idhren

Don’t hire too soon. Only do so when you and your cofounders really cannot manage any more.

6. Make Use of Interns

Whitney
Creative Commons License photo credit: avhell

A job in a startup can be exciting and provide great experience with plenty of responsibility. Offer a great learning opportunity and, especially in a tough economy, you can get smart people for free.

7. Get Cheap Help from Business School Students

Dunedin Internship 2011
Creative Commons License photo credit: Samuel Mann

Business school students are often keen to apply what they’re learning to real-world companies and may be willing to do projects for you for free or very cheaply.

8. Get Free Help from Local Universities

Travels in China
Creative Commons License photo credit: University of the Fraser Valley

Universities are keen for their students and staff to get involved with industry. Some offer schemes where they’ll do projects for businesses either for free or for very subsidised rates.

9. Hire Talent Over Experience

Sonrisa Colgate
Creative Commons License photo credit: americanistadechiapas

Aim to hire people with talent who haven’t yet got the experience to command high salaries or rates.

10. Use Google Apps (Free Edition)

Google
Creative Commons License photo credit: quinn.anya

If you have 10 or fewer employees you can use Google Apps Free Edition for your email and intranet.

11. Join Microsoft BizSpark

Microsoft Partner Day
Creative Commons License photo credit: Microsoft Sweden

Microsoft’s BizSpark programme supports startups in a variety of ways. An important one is that they’ll give you access to free Microsoft software (Windows, Office, etc.)

12. Use Free Trials

Beer snobs
Creative Commons License photo credit: waitscm

There are lots of web-based tools that can be handy for different things during your startup’s life — market research, website load testing, keyword analysis, and more. Often you can get a free trial of these tools, and the trial period can be long enough to get a lot of value. Later, when your business grows, come back and invest in a paid subscription.

13. Get to Know Your Customers Even Better

Two business men chatting, Pia Gioielli jewelers lion sign, a waiter from Pedro & Lola restaurant, set tables, palm tree, customers, Machado Square, Centro Historico, Sinaloa, Mexico
Creative Commons License photo credit: Wonderlane

You can’t get to know your customers too well. The better you understand them, the more effective your paid marketing will be and the less you’ll need to spend to get the same results.

14. Set Up Reciprocal Marketing Deals with Related Businesses

Meeting with Andrzej Poczobut 06
Creative Commons License photo credit: PolandMFA

Find a business that targets a similar demographic. Promote their business to your followers in return for them promoting your business to their followers.

15. Set Up Revenue-Sharing Deals

Half and half
Creative Commons License photo credit: Rya Pie

Instead of paying up-front, negotiate with publishers to market your business in return for a cut of the profits they bring you.

16. A/B Test Continually

Talking Logistics
Creative Commons License photo credit: Gamma-Ray Productions

A/B testing can improve the effectiveness of the key conversion funnels of your business. Many small, incremental improvements over time can translate to a huge improvement in the long run.

17. Do Your Own PR

prensa
Creative Commons License photo credit: Gonmi

Instead of hiring a PR consultant or agency, do your own PR. Journalists prefer to hear from founders anyway. If you’re based in the US, subscribe to Help a Reporter Out (HARO) to connect with journalists writing relevant stories.

18. Hire Freelancers Over Agencies

_DSC0149
Creative Commons License photo credit: banditob

Save money by hiring freelancers instead of agencies. Freelancers typically have lower overheads than agencies and can be more flexible about the rates they charge and the way they work.

19. Attend Local Industry Events to Get Free Advice from Experts

Women 2.0 Startup Weekend San Francisco 2011
Creative Commons License photo credit: adria.richards

If you live in a major city there are probably events where you can find experts in different areas. Don’t abuse it, but you’ll often find people willing to give you some free advice over a couple of drinks. Some events are more structured and directly tailored to startups, for example BootLaw in London is a great way to learn about law related to startups.

20. Work From Home

New display is BIG
Creative Commons License photo credit: Iain Farrell

If it’s just you when you’re starting out, work from home. Save the money you’d otherwise be spending on rent.

21. Ask Suppliers What Special Deal You Can Get

Bad maths
Creative Commons License photo credit: Danny Nicholson

If you don’t ask, you won’t get. Being a young company is a great reason to ask for special deals. You won’t always get them, but it doesn’t hurt to ask.

22. Keep Tight Control of Spending

P1130203
Creative Commons License photo credit: sovietmole

Consider having just one credit card for the company so that all the money goes through one person with an overview of the company’s finances.

23. Champion Frugality

Paola Longoria, medalla de Oro
Creative Commons License photo credit: americanistadechiapas

Lead by example and cultivate a culture of frugality within the company. Make it clear that a frugal attitude is valued.

(Thanks to Julian Hearn for tips 18 & 20.)

Did you find this useful? If so, please retweet it now:

Read More