Unfortunately, two out of every five startups fail. One of the main reasons startups fail is generally down to taking your eye off cash flow. In other words, running out of money. If you’re running a small business or a startup, it is essential that you keep your business lean. If you’re wildly spending or even just making poor purchasing decisions, you can end up shutting the doors to your company for good.


A lean business model focuses on growing your business in a way that requires less capital.


Here are four ways to make your startup leaner:


1. It’s better to make a wrong decision fast, then make the right decision too slow.

Impartial Reporter: credit: Unsplashcredit: Unsplash


Don’t take this literally but considering time is money, taking a long time to make a decision could make your business miss opportunities and slow down growth.


That being said, don’t be too hasty with decision making either. That’s not to suggesting you flip a coin if you’re unsure about the right call, just gather the information as fast as you can, let it process, pull the trigger, then stick to your guns and follow through.


This is one of the biggest advantages a small company has over large organisations. In a large corporate company, it can take weeks to get a small change implemented.  Why? Well, depending on the authority needed to make a decision and who’s asking the question, there could be multiple people that have to sign off on the proposed changed and that could take quite a while. It can quickly become a waste of resources and can cripple a business.


Small businesses and Startups can be more agile, they can make calls faster, but the problem is they’re often too slow to pull the trigger.


2. Limit expenses

Impartial Reporter: credit: Unsplashcredit: Unsplash


One big mistake a lot of entrepreneurs make is focusing on increasing sales and neglecting the mindset of staying as lean as possible. Lowering expenses is absolutely essential for small businesses to ensure cash flow is always healthy. If you are running your business from paycheck to paycheck, an unexpected payment could have a massive negative impact.


Here are some ways you can cut back expenses:

  • Lower Your Office Space Costs
  • Cut Staffing Costs
  • Barter for Business Goods and Services
  • Cut Supply Costs
  • Cut Advertising Costs
  • Cut Insurance Costs
  • Keep the Taxman at bay (Fool.co.uk has great advice for this)
  • Lower Water Rates (Check out Castle Water)


3. Constantly run tests

If you’re wasting time, money and resources on a new idea, you could be walking into a glass door.


Before diving into a new project, you should always try and validate the concept beforehand. Otherwise you might just end up wasting your money and time.


Naturally, with any new idea you’re obviously going to be excited but a good businessperson will know that diving in at the deep end without validation first is a bad idea.


4. Think twice before hiring

Impartial Reporter: credit: Google Imagescredit: Google Images


As your company grows, you’ll have to hire more employees to handle the extra load of work. Of course, whenever business picks up traction, companies naturally think to hire more staff but it’s essential that you’re retrospective on the circumstances that are making things so busy.


A huge amount of time could potentially be saved by refining certain processes or outsourcing time-consuming tasks for a cheaper rate. If you’re hiring someone to do a specific task, weigh up if it would be more cost effective to outsource the work rather than hire someone full-time to do it.


Creating a lean business is essential for your success in the world of business. It ensures your business is flexible enough to survive the ever-changing market and creates security for not only your employees but your business as a whole.


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