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Startup Spending

expense controlsIt’s easier than one would think for tech companies to overspend at the initial startup stage. Bright minds who dream of unlimited possibilities can cause things to go south in a hurry. Millions of dollars can be wasted in the blink of an eye. A lot of what happened to in the Internet Bubble years lurks just around the corner. Staffing the company with “big hitters” from outside companies and paying them exuberant salaries could be the quicksand of today’s tech market.

Companies have to think in terms of becoming profitable along the way. Having an “itchy” finger is a good point Phil Morettini brings up on one of his recent posts. The race to riches impulse is tempting indeed. Patience is thin and instead of educating the market, there’s a rush to spend huge amounts of capital on staffing and a professional image. Massaging that professional image could include spending on expensive office space and the like.

Staffing costs can go through the roof, from compensation and benefits to payroll and employee procedures too. Some HR costs are unavoidable but are a number of effective ways to manage associate costs. One of the best ways to curb costs is not to hire and expand too quickly. Get the business first, and then find the talent that can make it happen. Non-core competencies can be outsourced. There are some content and technical developments, along with accounts payable and receivables, that outside companies can take on.

Patience is necessary. While companies might think they’re offering the next breakthrough product or service, anything of value takes time to grow and mature.

Read Phil's full post here, and check out his "Selling and Marketing Software Through the VAR Channel: Morettini on Management Video Series"

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