I thought I'd share some details on how we save money as an early stage company.  I tend to agree that we have indeed entered "The Age of Frugality".  Multiply that (or would it be divide that?) by 100 for startup folks.  My wife and I do a number of things to reduce our personal burn rate — but this post is really more about what we do as a business to save money where we can.  So here are some things that we do - I'd love to hear your thoughts as well.

  • Obsessive focus on expenses — We watch every dime that we spend and rarely, if ever, buy things out of convenience.  The thought process is that we have more manpower than money, so we sometimes have to get our hands dirty doing things that people in larger companies would just pay for.  One caveat here - if we can save days on something that is critically important to make a sale, we'll pay for it.
  • Tie burn rate to progress — It's way too easy to get ahead of yourself to build in expenses in advance of expected progress.  It's probably less of a consideration for bootstrappers like us than people who are adequately funded.  I am really careful about adding to the burn rate until I know that we can cover it.
  • Shared office space — generally our policy is 3-4 people per office.  It's too close for comfort sometimes, but sometimes it is better to be cozy.  I don't think this will change anytime soon, especially given the shared space and meeting room space we get at the Austin Technology Incubator.
  • Bizspark — we aren't ashamed to enjoy Microsoft's largesse, especially since we're a .NET shop. 
  • Virtual bizdev — We conduct most initial bizdev outreach via Twitter, the blogosphere, and the phone.  When I need to travel, I try to get a few meetings in per trip.  I minimize air travel and especially hotel stays.  Finally, we try not to attend trade shows unless we know that we can meet a number of customers there.
  • Get the essentials for doing business — paper, business cards (which I'm ironically out of at the moment), web hosting, equipment, etc.  We try to anticipate our needs, because everyone knows that you really pay for urgency in just about anything you buy or sell.
  • Scan the credit card — The final thing we do is a bit counterintuitive.  We follow the rules above, but after that we really don't obsess too much.  You can waste a lot of time and money wondering if you should make a $100 purchase.  Our strength is agility, so we have to make decisions quickly and intelligently.

We try to make sure we don't get too "penny wise, pound foolish" territory.  We're oriented to watch our dollars closely, which is now (I'm proud to say) part of our culture.  By doing that, we can sure stretch a buck… not to mention a runway!