You have a great idea for a technological breakthrough, but you understand that you can rely on very modest investments, and your main challenge is to launch a startup on a tight budget. You choose between two paths – to seek investments, which is extremely difficult without at least a minimal version of the product, or to gather a team of desperate enthusiasts who will create an MVP for you. Well, the technology business is ruthless and has a financial barrier to entry. You do need startup capital to kick-start the development process of a new product and create something that will attract new investments. However, there are many ways to do everything right, rather than leaving it to chance, while still saving money. In this blog post, we will discuss the methods that will help you develop a technological startup on a tight budget.
What are the costs of a tech startup?
Let’s calculate the costs for a technological startup on a tight budget. Here are the biggest cost categories you will face.
- Salaries. This is the most significant part of the expenses for forming a team. It includes payment of wages for developers, designers, and product managers, as well as any bonuses or incentives.
- Taxes and Mandatory Payments. You should study the tax legislation before you start the process.
- Recruitment and Hiring. Includes expenses for advertising job vacancies, compensations to recruiters for candidate search, and costs for conducting interviews.
- Training and Development of Staff. At the initial stage, your team will need training on new technologies or work methodologies.
- Office Space and Equipment. If you plan to have an office, you’ll need to consider rent, utilities, and purchasing or leasing computers, and other equipment.
- Business Infrastructure. This includes expenses for internet, software, cloud services, and other tools necessary for your team’s work.
- Communication and Marketing Expenses. If your team will interact with clients or investors, consider expenses for marketing, advertising, and communication.
- Insurance and Legal Expenses. Consider insuring your business and legal services to ensure the protection of your startup.
- Project Management and Administrative Support Expenses. This includes payment for project managers, administrative staff, and other specialists who assist in managing the business.
The most challenging part is hiring and salaries because calculating them in advance is the most difficult. If you’re creating a technological startup on a tight budget, start by browsing job vacancy websites for developers, designers, project managers, and determine how much the work of these specialists might cost.
Read: Are software developer salaries falling? Market situation
Team composition for a technological startup on a tight budget
Usually included in the team:
- Technical Co-founder (CTO or Lead Developer). Responsible for the technical strategy and leading the technical team.
- Developers (Back-end, Front-end, Full-stack). Create and maintain the software or application.
- Designers (UX/UI). Handle user interface design and create user experience.
- Product Managers or Project Managers. Responsible for planning and managing the product development process.
- Marketers/Marketing Managers. Deal with marketing strategies, product promotion, and customer acquisition.
- Sales Specialists/Business Development. Responsible for finding clients and partners, and increasing sales volume.
- Analytics and Data Specialists. Help gather and analyze data for strategic decision-making.
- Technical Support/Service Engineers. Provide support and maintenance for the product or service.
Team members essential even on a tight budget:
- Technical Co-founder (CTO or Lead Developer)
- Developers (Back-end, Front-end, Full-stack)
- Product Manager
- Designer (UX/UI)
- Marketer/Sales Specialist
- Technical Support/Service Engineer
How to save money for a startup on a tight budget
Here are several ways you can save money when hiring a team for your technological startup:
- Working with Freelancers
Hire freelancers on a project basis instead of full-time employees. This can be more cost-effective, especially in the beginning when you have a limited budget.
- Outsourcing
Consider outsourcing certain tasks or projects to external vendors or agencies. Outsourcing can be a cost-effective solution for tasks that require specialized skills or resources that your internal team may not possess. JetSoftPro is happy to help you with team composition. We offer talents at a very good price.
- Remote Work
Consider hiring remote employees. This allows you to find talent at a lower cost since you are not limited by geographical boundaries.
- Utilizing Students and Interns
Consider hiring students or interns from technical educational institutions. They may be more affordable and willing to work for lower compensation.
- Automation and Use of Open Sources
Utilize open sources and tools for task automation. This can save your funds on developing and integrating solutions from scratch.
- Partnership and Service Exchange
Look for partners or companies that can provide services in exchange for your services or resources. This is a beneficial way of collaboration without additional expenses.
- Product Initiatives Instead of Individual Development
Instead of developing all features and components from scratch, consider using ready-made solutions or platforms to expedite the development process.
Read: Lean software development principles
- Flexible Schedule and Working Conditions
Offer a flexible work schedule or conditions such as remote work or part-time employment, which may attract talented specialists willing to work for lower compensation.
- Process Optimization and Use of Efficient Tools
Invest in efficient development tools to increase team productivity and reduce development time.
- Market-ready Solutions Search
Explore if some market-ready solutions or platforms can meet your needs so there is no need to start from scratch.
- Training Existing Staff
Consider training your existing staff in new technologies or skills, which can save costs on hiring additional specialists.
- Discovery stage
Prioritize the discovery stage where you conduct thorough research and validate your product idea before committing to hiring a full team. This can help you avoid unnecessary expenses by ensuring that you’re building something that addresses a real market need and has the potential for success. Additionally, during this stage, you can utilize lean methodologies and MVP development to test your concept with minimal investment before scaling up your team and resources.
These approaches can help you save funds when hiring a team for your technological startup on a tight budget while ensuring quality work.
