The Ultimate Business Cost-Cutting Guide

We all know that spending is key when growing a startup, but it can be easy to get carried away and start spending on things you don’t need. Moreover, you can be so busy running your business that you don’t have time to research how to get the best deals, or where you can cut costs. But worry not - Tally Workspace is here to help.

This guide is your cheat sheet on how to cut costs. We have asked the top finance professionals in the startup world to give us their insights and practical advice on how to keep costs low while growing a successful business.

Their well-thought-out advice and tips were crucial to the creation of this guide. I am sure you will be as grateful as we are when you read the gems of advice they have provided.

This guide will help you understand:

•  Which software is worth investing in

•  How you can save on software costs

•  Where startups are commonly spending too much

•  How to find the best value workspace

•  The best advice when it comes to cutting costs

Martin from Onside Accounting says
"We often see startups spending lots on recurring software that is not getting used. It comes as a surprise to them when we ask for invoices or receipts and our point of contact (usually a finance or operations person) either doesn’t know who bought it, what it's for, or both! It is generally a financial control issue, and we recommend tools like Pleo for clients of a certain size to help them manage spending limits, approval routes, etc. rather than having a company card that gets passed around an office!”

Top 5 tech tools that cover multiple tasks & teams:

1. Xero
Xero covers the finance stack and has integrations for all the bits it doesn't do!
2. Zapier
Zapier automates a huge number of tasks and integrates with all the key software.
3. Google Workspace
From email, to shared drives to calendars most startups we spoke to used Google Workspace.
4. Hubspot
Hubspot is a great CRM system covering sales, marketing and customer support.
5. Miro
Miro is great for collaboration across teams - flowcharts, whiteboarding & project management.

"Zelt tells you what user accounts are in there and which ones are not used anymore or belong to former team members. You can connect your SaaS apps to Zelt. For example, a recent customer we onboarded had 10 accounts in Google of former interns. On a headcount of 60, so they were overpaying 17% on their Google account.”
Chris Priebe, Founder of Zelt

Joes Adam, founder of Tangent observes:
"We’ve found Zapier to be hugely useful in automating a lot of manual and repetitive tasks. It’s really powerful with the number of apps you can automate from email to Google Sheets.”

Our very own Laura Beales, COO of Tally Workspace's top software recommendation is Cledara:
"Managing subscription costs can be challenging with different teams using various software. Cledara simplifies this by setting monthly limits on each subscription, ensuring accountability and preventing cost overruns. The platform also displays software ownership and usage while offering cashback on purchases, potentially covering the subscription cost."

Martin, founder of Onside Accounting is also keen on software that creates efficiency:
“We use GoCardless to automate our clients’ monthly payments by direct debit. We are able to send up to 100 invoices a month in minutes, with payments being collected and auto-reconciled in Xero by GoCardless. This means we have almost no cost associated with billing and credit control.”

It’s also worth noting that most software companies do offer promotions to startups, so speak to people in your network.

Make sure to check out the offers page on Tally Workspace to see if you can get a deal before you sign up.

“Notion has a very generous offering whereby they offer up to $1,000 in credit for start-ups. We were able to use a ‘paid plan’ with all its features for several months without spending a penny!”
-  notes Martin Brennan, founder of Onside Accounting.

Joe Adams, Founder of Tangent, adds:
“Choosing the right tools of the trade is key. Make sure to work out what you ‘actually’ need at any current time and reassess every quarter. No one wants to find out they have been paying for unused software. Keep track of your software subscriptions, especially the usage based ones, they start off cheap but soon become expensive when you grow users.” 

Make sure that you have a proper budget in place and understand when your revenue will start to come in. While it can be tempting to start investing when you have cash in the bank, it is easy to get carried away and end up with unnecessary costs that have no payback.

“It is easy to think that once you land some funding you can put your foot on the accelerator and ramp up spending, but reality is that you should look at every line item twice before committing.”
- Aarish Shah, Founder of EmergeOne, wisely notes.

1. Spending pitfall - HIRING
Staff are normally the single biggest cost for startups. Having to let staff go because you have overspent has far wider implications than other costs, so it is important to get this right. Here’s what our finance experts had to say on the topic:

Aarish Shah, Founder of EmergeOne:
“It is all too easy to accelerate hiring to try and move quickly, but the problem with this is that if performance doesn’t match your hiring you’re soon left with excess headcount and the incredibly difficult task of letting employees go. We’ve seen it of late with the recent rash of startups and scaleups going through numerous redundancy rounds – it is always better to hire slow and save pain down the track.”

Martin Brennan, Founder of Onside Accounting:
“We also see a lot of startups spending on hiring before they have a handle on the company culture and its people operations - We think it is better the other way around. We see tens of thousands spent on recruitment fees regularly, only for those recruited to move on in a few months’ time. The companies we see with a strong culture or big focus on company culture have very little staff turnover and in some cases no hiring costs at all.”

Atish Patel, CFO at Florence:
“There's always a problem of over-hiring, only hire if necessary or if they add value.”

Nick Telson, Founder of Trumpet:
“Can you afford to hire superstars on superstar salaries? Ensure the business is growing at the right trajectory before hiring for some luxury positions. Perhaps look at bringing in more inexperienced talent with the right attitude and get them a coach to grow them within your business and don't hire too fast”

Ben Adams, founder of Ben Adams Finance:
"Startups often overspend on salaries by hiring either highly experienced professionals with big salaries or those too junior for the role. Experienced hires may struggle in a startup's unstructured environment, leading to poor results and high costs. Conversely, junior hires may require supervision from senior staff, ultimately costing more. Finding the right balance in skillset is crucial for startups."

Jules Robertson, CEO of Tally Workspace:
“It is very easy to overspend on recruitment fees which can be frustrating especially when the hire does not work out. Spend time writing killer job specs and post them yourselves on Otta, Linkedin and Work in Startups. You can even put some money behind a targeted ad on LinkedIn. Or just reach out to those that might be a good fit!”

2. Spending pitfall - WORKSPACE
The second biggest cost for most startups is workspace. In a world of increased remote work and flexibility, this is an area where we are seeing startups make huge savings. A lot of smaller companies working with Tally Workspace pay for an office 1 or 2 days per week instead of committing to a full time office. Our finance experts had a few thoughts on the topic:

Martin Brennan, Founder of Onside Accounting:
“One thing to be careful of – If you are being offered a discount or other incentive to pay upfront, do your research very carefully and seek a professional opinion. We had one customer join us after they had paid a 12-month rental fee upfront, only to find out the company was insolvent and about to be closed down.”

Nick Telson, Founder of Trumpet:
“The office is of course a big expense so make sure you find an office that fits your team size and perhaps the next 12 months, dont go too big too soon and look beyond the standard "weworks" as independent offices are more affordable.”

Aarish Shah, Founder of EmergeOne:
“I once worked with a client that had committed to a 5 year lease after landing some funding, but business didn’t take off as well as they hoped it would, and it became a constant issue to figure out how we were going to manage cash flow to ensure we could make rent. Flexible contracts, co-working spaces, or PAYG services are a much better option, especially in today’s remote/hybrid world.”

Ben Adams, founder of Ben Adams Finance:
"I use an on-demand service like Tally Workspace for workspace rental rather than signing up for a long-term, inflexible deal. On-demand services save money as startup requirements change all the time. If you’re locked into a long-term workspace deal, you risk spending money on a space that doesn’t suit your needs for months."

3. Spending pitfall - ACCOUNTACY AND LAWYER FEES
Another big fixed cost can be accounting and lawyer fees. While finance can be intimidating for those without prior experience, this does not mean you should commit to large monthly fees before you have revenue or costs. Here’s what our experts thought on the topic:

“I’ve seen companies pay accountants before they have any form of a business. Just because you are registered on Companies House doesn’t mean you need an accountant quite yet! Talk to other startups and try not to commit to monthly fees until you have to.”
-  Laura Beales, COO of Tally Workspace.

“Early on I think start-ups can overpay on accountancy fees, it is quite simple to do the basics yourself when money is only going out! You can also save hundreds by doing SEIS/EIS advanced assurance yourself.”
-  Joe Adams, Founder of Tangent.

“Without a decent finance person, startups just hand over cash constantly to lawyers, that they really didn't need to.”
-  Leona Mondsee, CFO of Rebank

Summary on common spending pitfalls:
There are plenty of spending pitfalls to watch out for! Be careful before you make commitments. The most common spending pitfall of all is simply not negotiating! Most companies will offer big discounts to startups in the home that we will be big fee payers in the future when they grow. If you don’t ask, you won’t get!

As you are building a business and growing a team, workspace is commonly front of mind. But in the world of hybrid and remote work it can be hard to know what workspace you need and how much you need to spend on it.

Getting the balance between cost and productivity can be a challenge.

Joe Adams, Founder of Tangent:
“I’ve struggled working from coffee shops etc, as the WiFi isn’t great and there is no privacy to take calls.”

So what are the experts' top tips for getting good value workspace?

Yousif Oghanna, CFO of Feast It:
“Treat everything as negotiable - ranging from meeting room credits, through to private wifi, and the deposit required on the lease. Viewed as an "all-in" cost, you have far more levers at your disposable which negotiating on before signing a lease can save you a lot over time.”

Aarish Shah, Founder of EmergeOne:
“It’s all too easy to get trapped into leases you don’t need, or take on more space that is necessary. It’s always better to keep things as flexible as possible for as long as possible and only commit longer term when you are confident that you need to.”

“Our plans are for a hybrid model to keep costs down whilst still building the team culture through regular in-person working through the week”
-  Joe Adams, Founder of Tangent.

“People often fail to negotiate on big expenditures. Not everything is SAAS and there is definitely space to negotiate on a lot of things.”
-  Leona Mondsee, CFO of Rebank.

“Rolling contracts with short notice periods are very popular and they give growing businesses a chance to expand their workspace quickly and easily. Companies like Tally Workspace offer great solutions for those that don’t need a set space 5 days a week and want to pay for what they actually use.”
-  Martin Brennan, Founder of Onside Accounting.

YOUR OPTIONS:

• REMOTE - Don't provide employees with workspace; instead, invest in equipment for productive remote work, like monitors and ergonomic chairs. Use Tally Workspace platform to book meeting rooms and event spaces for occasional in-person gatherings.

• PART-TIME OFFICE - Ideal for 1-2 days/week team meetings in private spaces, this option offers privacy at part-time cost. Share your requirements via Tally Workspace's quick questionnaire for part-time office suggestions.

• ON-DEMAND - For dispersed teams, provide access to on-demand workspaces, allowing individual or group use with set monthly budgets. Tally Workspace platform offers cost-effective access to 2,500+ workspaces and easy budget management.

• FULL-TIME OFFICE - It makes sense to get a private office if you have at least 4-5 team members using workspace at least three days a week. Test a full-time office for a month. Let Tally Workspace know your office space requirements for a full market review and budget-friendly options.

When you are growing a business, it can seem like you are constantly adding costs and that you are never able to cut costs. So in what areas is it possible to cut costs?

Aarish Shah, Founder of EmergeOne suggests:
"Evaluate each expenditure independently, focusing on discretionary spending like SaaS tools (just use Google Sheets!), travel, entertainment, or consultants. However, headcount is often the largest cost for startups and scaleups, and unfortunately, it's typically the first area assessed for savings due to its significant short-term impact."

Yousif Oghanna, CFO of Feast It:
“Don't be afraid to ask managers to make business cases for any discretionary spend. Ask them to consider why you need to spend money on any areas not touching your funnel."

Nick Telson, Founder of Trumpet:
"Monitor small expenses as they quickly accumulate. Evaluate software usage and effectiveness, rethink having a luxurious office space, reduce frivolous spending like Ubers/taxis, and opt for cost-effective alternatives for team events. These steps can help control overall expenses."

Don’t worry, you don’t need to struggle alone. It is important to involve each team in the cost cutting process. They know best about which area they can and cannot cut spend on without negatively impacting the primary business goals.

“It staggers me how many early stage startups don't have a financial model and budget in which they can plug in all the numbers and see the effect on cash flow/money in bank - this goes for ALL costs and ALL revenue levers with a dashboard change where you can play with assumptions and see how that affects cash. Any larger decisions should be made via the budget/forecast before being decided on.” - Nick Telson, Founder of Trumpet

ABOUT TALLY WORKSPACE

Tally Workspace’s mission is to empower users to make smarter workspace decisions. Our technology and hands-on team make sure that you have all the right information to find the right workspace setup for your team. Whether that is giving them access to on-demand workspace or finding them the perfect office to match their company’s culture.

If you are working out where to work, then check out our PAYG workspace, or let us know your requirements for a full-time office.