Lowering Your Startup Costs

(Eric Halsey) #1

One of the most consistent frustrations for African founders is a lack of funding. But some of the founders we’ve interviewed have shown that sometimes you can do a lot with very little money. This is how they managed to lower their startup costs.

##Cutting Costs
Kenyan startup Chura was started by a team of university students, so it’s not surprising that they didn’t have very much money to start their business. They realized that if they didn’t have to pay rent for a place to work, they could cut their startup costs significantly.

“We saw the need to have an office which would double as a living space. It was also good so that we could bounce the ideas off each other, discuss ideas during dinner.”
-Samuel Njuguna, Co-Founder of Chura

Then, there were added benefits. Living and working in the same space also led to more ideas being shared. Of course, there were possible downsides, any arguments could really lead to problems. But as long as they managed everyone’s working styles well, they were fine.

“It was a no brainer, living in one place would let our allowance have more value.”
-Samuel Njogu, Co-Founder of Chura

##Spending Money Where it Matters

“Grow slowly and bootstrap, that’s what we did. We started with a KBO, a google program for free websites, we started with just a facebook page, then a free website, why buy a .com domain with no customers?”
-Brian Bett, Co-founder of Illuminum Greenhouses

Bett had a similar strategy when he started, though a bit more extreme. He looked for every possible place to save money. That meant not buying a website, not ordering food when meeting clients, using free accounting software, and relying on free advertising.

“I will tell you about our first meeting, we did our first sitting meeting with a client, you go to a restaurant and delay, you don’t want to order the meal.”
-Brian Bett, Co-founder of Illuminum Greenhouses

Of course for some companies, paying for one or more of these things can be essential. The point is to look at everything that might cost money for your startup and ask “is there a way to reduce this?” Bett and Chura both found lots of creative ways to cut costs and as a result, their companies were able to get off the ground with very little money to work with.

“Why pay for the system when you have no cash in the bank, there’s a lot of free software online, there’s free accounting software online, use free advertising through social media.”
-Brian Bett, Co-founder of Illuminum Greenhouses