To sustain, scale, thrive and stay ahead of the competition curve, managing costs has become the main objective for several start-ups. Entrepreneurs are going all out to ensure cost efficiency and propel the growth charts of their ventures in an ecosystem known for its shutdowns and takeovers.
“It is about being judicious, well-planned and well-thought outright in advance, rather than incurring extra expenses,” says Gagan Kapur, co-founder & CEO of health tech startup, Easybuyhealth.com.
Startups have chalked out multiple strategies for cost optimisation, right from leveraging technologies such as data analytics and cloud, to making the right hire, to utilising co-working spaces instead of renting out swanky offices.
The omnichannel travel start-up Goomo considers expenses associated with its workforce, technology and marketing as its primary costs. So to manage costs better, Goomo has worked towards reducing its marketing expenditures significantly, while working on innovative ways to drive traffic to the site. Says Varun Gupta, CEO, Goomo, “We have reduced the frequency of our internal employees’ business travel and we ensure meetings are done mainly through video or Skype.”
Ditto for digital microlending venture Happy Loans, which now conducts virtual meetings with employees and partners across the globe “to optimise costs and time,’’ says the founder & CEO Manish Khera.
For Goomo, another way to enhance organisational efficiency is by streamlining processes and employee responsibilities to ensure there is no duplication of efforts between teams. Furthermore, “Goomo is focused on automating backend processes to restrict its overheads and labour costs,” says Gupta.
At Genext Students, a hybrid tutoring platform, technology is the key driver for reducing costs. “Instead of face-to-face orientation programmes for onboarding tutors, we have integrated the process into our mobile app. This helps us understand whether the tutors have understood the process and to establish the best match with the student. We also use technology to measure our costs across each stage of the marketing funnel and implement decisions to reduce the same,’’ says Ali Asgar Kagzi, co-founder & director, Genext Students.
Moreover, with co-working platforms such as WeWork, GoWork and Creator’s Gurukul making inroads into every city, startups are getting their employees and associates to work from such spaces, thereby saving upon rentals, infrastructure costs and overheads.
“Working in co-working spaces saves us costs and gives a better experience to employees. If there is a skill gap, we prefer to collaborate with consultants or agencies. We will always be lean in size,” says Khera from Happy Loans.
These various methodologies have helped startups to save much.
Says Shubh Bansal, co-founder of Truebil, a marketplace for used cars, “We have saved lakhs using online cashback schemes of wallet companies and by accumulating credit card points. Presently, we have reduced costs by approximately 30-40 percent on an annual basis, and we aim to reduce it more by identifying a system to quickly assess our business critically.”
Gupta says Goomo is on track to achieve its goal of reducing cash outflow by 50 percent over the next 6 months. For Genext Students, the goal was to reduce costs across segments by 50-70 percent in the current financial year. “We were able to attain our cost optimisation goal. In some cases like in orientation, where we moved to app-based training, the cost reduction margin was much higher. We will look towards leveraging artificial intelligence and machine learning to automate a lot of tasks so that our existing teams can utilise their potential better,” says Kagzi.
Cost optimisation goes a long way in helping ventures.
For a startup, says Kapur of Easybuyhealth, “until you start creating significant profits, there is an upfront investment in various expenses and saving every penny goes back into extending the lifespan of the fund-raising that has been done.”
According to Bansal from Truebil, cost optimisation helps to score brownie points in terms of further investment and hiring manpower, taking the brand to the next level of growth.
“With the success of our optimisation strategy, there is a feeling of renewed optimism in the company that we are now a leaner, more sustainable organisation with a strong position in the market,” says Gupta from Goomo.
SMART ALLOCATION
- Start-ups are saving upon rentals, infrastructure costs and overheads by working in co-working spaces
- Cost optimisation helps to score brownie points in terms of further investment and hiring manpower
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 "Cost optimisation")
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