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frank thomas 11 Unnecessary Startup Expenses That You Should Avoid
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Introduction to Unnecessary Startup Expenses

Let’s face it when you are finally working on your dream startup project; you want to give it your best without giving a second thought about the expenses.

You waste a lot of money left and right assuming you are spending it wisely. Most entrepreneurs often tend to overlook one golden rule of business – not to waste money unnecessarily.

Many business schools students are assigned case studies or financial accounting assignment on startups to help them understand the economic challenges that entrepreneurs encounter.

All startup businesses have a limited budget from the investors, which means the team must audit every aspect of the company, which is likely to drain out cash.

It is not always easy to make budget cuts to save money. But there are some ways which you adopt to stop wasting money.

    1. Don’t hire too many full-time employees:

    Many startups often tend to make this mistake. Hiring a team of full-time workers will cost you more than you anticipated. Full-time engineers and programmers are expensive. Apart from the founding members try to hire part-time professionals and subcontractors instead. Once the business kicks off, you can ramp them up to full-time positions.

    1. Stop with the fancy office perks:

    These days startups spend way too much on providing potential employees with additional perks as a Big Five company would. At the early stage, spending on bonuses and compensation is an unnecessary expense.


    Instead, the companies should focus on hiring talents who believe in the business goal and are willing to give their 200% to reach the goal.

    1. Set your startup’s priority right:

    Most students choose to draft a plan before writing an assignment as it helps them to stay track of the task. Similarly, you need to have a plan right from the beginning and stick to it.

    If you are an app development startup, initially your plan should prioritize development expense and not on marketing. Don’t waste money on something that could wait until later.

    1. No relying on cheap, temporary solutions:

    If you buy a cheap and short-term solution for saving money now, it will add on to the expense later. Invest cash on long-term solutions even if it costs a bit more. Whether its software, CRM, or other requirements invest in those instead of investing in free coconut water to attract employees.

    1. Avoid unnecessary business travels:

    Many entrepreneurs visit prospective investors for initial discussions without calculating the sky-high travel costs. Before you make such hasty decisions, stop and think smartly.

    Reach out to the investors and check if it’s possible to complete the initial meetings over Skype or Zoom. If not, try to book tickets at least two weeks ahead, it will help you save by 35%!

    1. Avoid leasing fancy office space:

    Another unnecessary expense is leasing expensive office space. Renting a corporate office space means making hefty security deposits, regular maintenance, and other expenses. At an initial stage, such type expenditures are unnecessary and can create a setback in the longer run.

    1. Poor tax planning:

    If you are not proactive about your taxes right from the beginning, it can cost you big. Working with an ineffective account who has inadequate knowledge about your business sector will result in trouble.


    Hence, work with professional accountants with relevant industry knowledge who can offer a proactive tax planning approach and help you avoid expensive tax surprises.

    1. No over-budget outsourcing:

    It has become a fashion of entrepreneurs to outsource unnecessary work responsibilities for a high price. This is another way businesses tend to drain out cash. You should analyze your business requirements and the strength of your team so that you can realize most of your revenue.

    1. Don’t hire unqualified staff:

    By qualification, we don’t entirely mean academic qualifications. Some startups hire underqualified staff to get things done quickly without investing much.

    Always hire qualified workers who fit the job role and can give you the best results. It is still a safer choice to hire two experienced and skilled employees than a crowd.

    1. Business expense reimbursements:

    Startups often overlook the miscellaneous expenses like – meals, travel, entertainment, etc. which later shows in depreciation. That’s why you should maintain a clear record of business expenses and draft a proper reimbursement policy at an early stage of the business so that budgeting becomes easy and accurate.


    1. Lavish business parties and team outings:

    Such expenses might seem like energy boosters for the teammates, but they are certainly not budget-friendly. Some startups experience success at an early stage, but instead of saving for the development of the business, they throw expensive “success” parties or holiday parties. Celebrate when you have crossed your business milestone, and you know you are on solid ground. Until then, such expenditure is a sign of wastefulness.

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