When it comes to starting a business, you can ask yourself; How can I establish a web startup with a low budget? In this article, we will go through the details of establishing a web startup with a low budget.
When starting up a business, the budget is one of the questions on your desk. How much you need and how you can reduce it to survive the storms in front of your business.
As you are reading this article, I congratulate you because you are probably thinking to start a business.
Starting a business is an exciting feeling that you can’t have from any other things in your life. Creating the business plan, renting the office, buying the office equipment, hiring the employees that you need, etc.
Defining the necessary budget is one of the first things you need to do. If the budget is higher than you can risk, you may even think not to start it. Check out the expense list below to be aware of the setup and monthly costs of your startup.
Setup Costs (paid once)
– Company registration fee. It is 12 GBP in the UK but may be higher or free at all in other countries.
– Office equipment like tables, chairs, computers, phones, coffee machines, cups, lights, etc.
– Some motivating fun staff like billiards, table tennis, etc.
– Linkedin Ads to find professionals to work with
– Office space rent
– Salaries of employees
– Meal and transportation of employees (if you want to pay as the company)
– Legal fees
– Software licenses
– Domains, hosting, SSL, and other web-related costs
– Internet and phone lines
– Electricity, heating (gas)
– Coffee, tea, and other drinks
– Office cleaning
For sure, the above list doesn’t include everything, you should separate some more money for the costs that you didn’t guess.
However, the total setup fee can be between 1000 GBP — 5000 GBP for a small startup company. And the monthly costs may be between 5,000 GBP — 15,000 GBP in the first times.
Then, you must calculate how long time is needed to create the first version of your product. Let’s say, you created it in 3 months. You need to make an advertisement to announce it to the public.
After the advertisement, you may need some more months to be able to get visitors, users, or customers.
So, you must have enough budget to spend from your pocket for at least 6 months up to 12 months. (if in 12 months you don’t earn enough, you may think about your product quality and marketing strategies, something may be wrong)
So, roughly, you need between 31,000 GBP — 185,000 GBP for your startup.
This is a very basic calculation and may change by many parameters. For sure, you must calculate each detail and there shouldn’t be that much gap in your plan: 31K – 185K.
How to Establish Your Startup With a Low Budget
You can find an office in a cheaper place, you can cut from the employees’ meal and transportation costs by not offering these services, and there are some more options you can use to reduce your costs slightly. But…
As you can see from my basic calculation, actually your biggest expense is the salaries of your employees. See the government website for the salaries in 2020: https://www.ons.gov.uk/visualisations/dvc1031/fig6/index.html
You can also search on Indeed, for the positions that you will hire your employees. For example, a web developer’s salary starts from 200 GBP / day. That means 4,200 GBP / month. If you need higher skilled or new technology developers like Node.js or Python, you will even see soaring amounts.
If in a way, you can reduce the total salary expense by 1,000 GBP per month, you save 12,000 GBP for the most critical first year. If you hired 3 developers and you reduced 1,000 GBP for each developer, you will save 36,000 GBP in 12 months, and so on. Calculate it in your situation.
So, this is the best place where you can cut the costs of your startup. But how?
I worked as a web and software developer for around 20 years and have enough experience in working as a developer (an employee). I am the founder of the software development company – Mudimedia -. I have enough experience of being the owner of a startup. And I recommend you to hire a service from an outsourcing company.
I didn’t hire any outsource developers for my startup because I established my company in a low-salary company, but my company has many developers who are successfully hired by our European and Asian customers. We work with these customers for many years. You can listen to their success stories from themselves.
So, I recommend you to work with an outsourcing company and hire the already established professionals to your company for even half price of your cost in the UK, USA or other countries.
There is a wrong belief that it is hard to work with outsourcing companies. But no, they have a system to make things done. Ask them how it is going. Ask them about their system.