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How to Make Your Lean Startup Work With Almost No Money

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Deanna Ritchie


Every year, new startup entrepreneurs attempt to launch a business on the leanest budget possible. It could be because they have limited access to funding, because they’re trying to maximize profitability, or another reason entirely. Whatever the case, you’ll need to make some big sacrifices and strategic managerial decisions if you want this lean startup budget to work — and it’s definitely possible.

How to Run a Lean Startup

Here are a few tips on how to launch your lean startup with a small budget:

Operate Your Lean Startup Remotely

Whatever your growth strategy is, you can make it much more likely to succeed if you reduce your operating expenses. One of the best ways to reduce your operating expenses is to reduce or eliminate office costs.

If you take your lean startup remote, forgoing a physical office space entirely, you can cut multiple different costs simultaneously. There will no longer be a need for an office lease, utility expenses, cleaning fees, or office supplies for a whole office.

There are certainly some advantages to having a physical office space, such as enabling better collaboration and teamwork within your departments and creating a more coherent sense of cultural unity within your organization. However, you’ll need to carefully consider whether these advantages are worth the financial price on your lean startup.

If you’re not ready to go fully remote, that’s okay. You can use some of the following strategies to reduce your operating expenses in other ways.

Consider a hybrid workplace.

Instead of going fully remote, you might adopt a hybrid model. In this approach, some of your employees will continue working from home, while others will work from the office. This allows you to attempt to get the “best of both worlds.”

Choose the right location.

Be discerning when choosing a physical office location. Sometimes, choosing a different city or a different part of the city could end up slashing your costs significantly. Business owners are sometimes willing to pay a premium for a hot location, but if all you need is a generic office, you’ll have far more options if you look outside of prime areas.

Pick something small.

Err on the side of a small space. As the square footage of your office grows, so do your expenses. Ask yourself if you need all the extra space. Embrace minimalism and choose a shorter lease in case you need to move to a bigger location in the near future.

Upgrade what you can.

If you want your office to be functional and comfortable, you can make some inexpensive upgrades. For example, you can upgrade the office bathroom on a budget by adding a bidet, redesigning the room, and adding nicer features (like odor control). You can upgrade the break room with a nicer table, better cooking equipment, and something recreational for employees to enjoy, like a dartboard. Even these small investments can make a big difference.

Negotiate the lease.

Don’t be afraid to negotiate the lease. You may be able to bring your rent costs down just by asking.

Hire Only the Best Employee Fits

Another major expense your lean startup will have to carefully manage is labor. Paying your staff can be excruciating in the early years of a business, so use the following strategies to keep costs low without sabotaging workforce quality.

Choose talent over experience.

It’s tempting to hire people based on experience, since experiences correlate with both knowledge and better performance. But experience also comes with a cost. Instead, consider hiring based on talent. There are plenty of young people with ample talent and minimal experience who are worth hiring, and they’re not going to cost your organization much.

Focus on versatile picks.

In the early days of your lean startup, your hires should be versatile. You might be hiring a person for marketing or HR, but would this person be willing to dabble in the responsibilities of another position? Or another department? Obviously, you don’t want to overwork your staff, but your business can operate much leaner if your people are flexible in the responsibilities they take on.

Lead Lean

If you want your employees to operate with a lean mentality, you have to lead with a lean mentality. Essentially, this means making decisions and acting in a way that you want your employees to model. If you want them to be discerning and choosy when selecting a new acquisition for the company, demonstrate that behavior yourself. If you want your employees to be willing to put in extra hours when necessary, make sure you’re putting in extra hours as well.

Be Wary of Technology Upgrades

Your lean startup needs technology to run (and grow), but new technology can also be an expense trap for inexperienced startup entrepreneurs.

Here are some ways you can mitigate that:

Employ technological minimalism.

Technological minimalism means acquiring and using only the technologies that are essential for your business. Overbuying or investing in technologies that complicate your business, rather than streamlining it, can be devastating for your budget.

Choose your acquisitions carefully.

It’s tempting to buy a new tool because of its innovative features or its sheer novelty, but you have to fight back against this temptation and think critically. Choose your acquisitions carefully and add them one at a time.

Invest in now.

Every startup needs long-term thinking, but when it comes to technology, you should focus on investing in what you can use today, with an emphasis on scalability. If you spend three years building the critical technology your business needs in the future, you’ll probably run out of money before you even get a chance to use it.

One simple strategy to employ is to buy used technology whenever it makes sense to do so. There’s no reason everyone on your team needs the latest model when previous generations still work perfectly fine.

Automate Everything You Can for Your Lean Startup

Next, try to automate everything you can. Automation technology ranges from free to somewhat expensive, so this isn’t always going to be possible. But for the most part, investing in automation means greatly reducing your expenses. You don’t have to pay someone to do the work you’re automating. And on top of that, true automation is so predictable and repetitive that you can usually count on higher productivity as well.

Use Organic Marketing

Your business isn’t going to grow reliably unless you employ some kind of marketing or advertising strategy. The problem is, marketing and advertising can be expensive.

That’s why it’s important to lean on organic marketing strategies whenever possible. Strategies like search engine optimization (SEO), content marketing, and social media marketing are free to start, enabling you to reach small but relevant audiences. They are also highly scalable, allowing you to reach millions of people if you’re diligent and a little lucky.

Keep Adapting

Finally, keep in mind that your lean startup isn’t going to be successful if it remains stagnant for too long. Expenses that were too steep in the early days of your business may begin to look more reasonable. The strategies that allowed your lean startup to grow in the first few months may no longer be relevant. Be sure to take periodic assessments of your business’s spending, budgeting, and overall management so you can keep making adjustments.

Running a business on a lean budget isn’t easy, but if you can manage to do it while keeping the core ideas of your business intact, you’ll set yourself up for long-term success. After even a few months of operation, you could be in a better financial position — and potentially, one that could allow you to reevaluate your lean philosophy altogether.

Featured Image: Startup Stock Photos; Pexels.com.

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

Politics

Fintech Kennek raises $12.5M seed round to digitize lending

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Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

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Politics

Fortune 500’s race for generative AI breakthroughs

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Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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Politics

UK seizes web3 opportunity simplifying crypto regulations

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Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

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