Focusing on attracting new clients is one thing, but managing your expenses is as important, if not more important. In many software companies, especially those in the startup phase, managing expenses is given a low priority, but servicing and getting new customers is given high priority.
Whether you are a startup or are managing a large tech company, and everything in between, expenses can rack up faster than one might expect. There are always only two ways to increase your net income, either drum up new business or reduce your current expenses.
Well, we know that expanding your userbase is easier said than done as a startup, otherwise, every startup would easily be doing it! However, cutting down expenses at any software company can be done almost instantly.
It is our duty to show attorneys, from small to large tech companies, various ways of reducing their monthly expenses.
Let’s jump right into it!
Manage Your Monthly Subscriptions
You already know how easily subscription services can increase your monthly overhead. Some subscription services are absolutely necessary, and not having them can make it difficult to manage your practice. Yet, from these necessary subscription services, there are ways you can still reduce the expense, in most cases. However, many tech entrepreneurs subscribe to completely unnecessary services that can very easily be canceled. Here are some ways you can reduce your monthly fixed overhead:
Switch from landline phone service to VOIP
Switching your telephone service from a landline to a VOIP system (Voice Over IP) can easily save you hundreds to thousands of dollars every year. It’s even possible to keep your current phone number while switching to a VOIP service. If you’re considering this option, then I recommend you go with NetTalk, a VOIP box with no monthly fees. You can easily find a NetTalk box for approximately $50.
Get Rid of Extra Subscriptions
Be careful of unnecessary subscription services! If you truly want to save as much money as you can, then cancel your memberships with companies that don’t serve to improve your ability to serve your users. The rule of thumb is: if it’s not a necessity in your field, it’s not worth your money.
Use a Cash-Back Credit Card for Monthly Subscriptions
As we mentioned before, some subscription services are absolutely necessary for software companies. You’re going to need them whether you like it or not, so why not take advantage of credit card cash-back offers? Think of it as getting a discount on your purchases.
Go Paperless Where You Can.
This might not sound like a big saving, but you will be surprised at how much money is wasted on paper, post-it notes, pens and pencils (especially when they disappear), and printer toner. Of course, there some cases when you would need physical copies; but in this day and age, the world is moving towards everything being digital. For example, company’s such as RightSignature or DocuSign eliminate the need for printing contracts, and allow you to email a digital copy of the contract to collect signatures.
Taxes are the biggest expense in any business, whether it is a software company or an online e-commerce site. However, taxes are especially higher among self-employed professionals, such as attorneys, doctors, dentists, and etc. We highly recommend that you consult with your accountant to find every possible way to legally cut down on your taxes.
Do Video Conferences Instead of In-Person Meetings
You will save a lot of time and money by simply doing video conferences with your clients, instead of meeting with them in person. For example, just imagine how much money is spent on gas and how much time you spend when you are driving in between meetings. Of course, do this whenever possible. Sometimes, meeting in person with your clients is necessary, and you wouldn’t want to frustrate them by doing a video conference instead.
Save Money on your Office Lease
Renegotiate your current lease terms
You might be able to better your lease terms with the property management by simply opening the topic for discussion. Especially if you have been at the same office for years and are on good terms with the property owner, you might have a better chance of lowering your rent, because every property owner’s first priority is to have good tenants that don’t cause trouble and pay the rent on time.
Share an Office with Other Attorneys
If you’re the type of tech entrepreneur that needs an office but has more space than needed, then it might be a wise choice for you to share the office space with other entrepreneurs. It’s very common for startups to take this step, but we have also seen many medium-sized software companies share the same office space. It’s a great way to split the cost of office expenses, such as rent, internet, utilities, and etc…
Consider a Virtual Office
For startups who very rarely have meetings at their office, they most probably don’t need an office in the first place. Using virtual offices would be ideal for them, because they can eliminate the large overhead of having an office. Virtual offices are usually around $50 to $70 per month, and they give you an office address, receptionist, and in most cases, a telephone number. Virtual offices are offered by actual office buildings, which means that if you ever need to have a private meeting, then you can book their conference room and have the meeting there.
Consider a Good CRM
A good CRM is designed for many purposes, but the primary purpose being that it helps startups better organize and manage their company. In many cases, a good CRM software eliminates the need to hire an office administrator/secretary. They essentially help you schedule appointments, track progress, organize documents, manage billing, manage internal financials, and much more. Another benefit of using a good CRM software is it allows you to go as paperless as possible.
Cut Unnecessary Marketing Expenses
Marketing tools are always changing to more effective methods. Many tech entrepreneurs still use outdated marketing methods, which do not perform as well as they should be, compared to the current standards. The bottom-line for any marketing campaign is and has always been the return on investment – bringing in new users. The money spent on some traditional forms of advertising and marketing, such as print advertising, can be used for more efficient and higher-performing methods, such as targeted online advertising. In the case of online advertising, your money is better spent on targeting your marketing campaign to people who actually need your services than the general population.
Only Keep Necessary Staff Members
Consider a virtual assistant/receptionist
As mentioned above, outsourcing to a virtual receptionist is a terrific way of reducing overhead. Although, many software companies cannot outsource to a third-party receptionist, because they want complete control over their employees, most startups can greatly benefit from these savings. Those who hire virtual receptionists claim to save approximately $2,000 every month. This option might be worth considering if your receptionist doesn’t handle other clerical work.
Let Go of Staff Members Who Don’t Perform Well
If your staff isn’t performing well, then it’s time for serious changes. By letting go of low-performing employees, you can eliminate a large expense that can later be used to hire better employees. Always give the position to an employee that deserves it. Every software company in the world is only as good as its employees.
In EVERY business, cash flow is KING. Apply these steps in how you manage your software company, and you will immediately boost your net income.
Some people might not believe that cutting expenses will benefit them greatly, because maybe the amount of money they’ll save isn’t worth their time. If this is you, by any chance, then maybe you need to consider how this increase in capital can be used to advertise your practice to bring in new clients.