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Raising several million for a startup may sound like a lot, but the money can go fast. Here are some strategies to stretch the dollar:
First and foremost: Focus on your core competencies. Everything else you should outsource and delay payments as long as possible.
Office space: When shopping for an office, keep an eye out for special incentives and contests. Many commercial property companies have special programs designed to help startups. We started our company during our Babson MBA program, entered several business plan competitions, and won some great prizes, including our 1,600 square foot office.
Buy used equipment: Try to stay away from buying the biggest and “baddest” office equipment. In many cases used and slightly outdated products work great and cost a lot less. When you need the latest equipment — such as laptops — look into leasing to spread costs.
Affordable product development: Look to educational institutions for creative development. Many schools offer consulting or research classes for a fraction of the cost of professional firms. For instance, we sponsored a Research and Product Development class at the Rhode Island School of Design to develop our first products. This not only reduced our product startup costs but gave us a fresh perspective. Students are not encumbered by any corporate philosophies or bureaucracies, and this “freedom” produces some really original thinking.
J.B. Schneider and Antonio Turco-Rivas
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