Capital efficiency is critical when starting or scaling a business. Considering things like hiring, office space, and using free resources can all make impacts on your bottom line.
Ellie Symes, co-founder and CEO of The Bee Corp, shared techniques on how to squeeze value out of every dollar, or lack of dollars, without sacrificing quality.
Below are notes from her presentation. Her slides are posted here.
WORKING FOR FREE
- Salaries are The Bee Corp’s largest monthly expense right now.
- Think about working for equity.
- They’ve worked with a lot of students and interns to get work done.
- Right now, they don’t pay their undergraduate interns, and the internships are project-based. Graduate school interns get paid, but they do more work directly related to the business and bottom line.
- The Bee Corp had their logo donated.
- Have you heard about what Tesla is doing with the Model 3? They’re paying for their production facility with pre-payments for a product. The Bee Corp does that for their software.
- If a customer is invested enough in a software, they’ll pay you in advance to finish it.
- When you build something and receive pre-payments, you know there is a demand for your product and that there are people willing to be paying customers.
- Figure out what people will buy beforehand!
GRANTS, COMPETITIONS, AND RAISING MONEY
- The Bee Corp has been either a finalist or winner many times. They’ve won two grants this year.
- Hearing “no” makes you more resilient, which means hearing “yes” is more exciting!
- Don’t use a grant writer! Grants are mostly research and writing. Grant writers only edit what you actually submit. Grants are just like rubrics in school. They’re a lot of work but aren’t hard to apply for on your own. If you’re trying to be capital efficient, don’t hire someone. If you’re trying to be time efficient, then hire someone!
- Negotiate caps on legal fees. Ellie does more work, but she gets bills that she expects. She saved approximately $10,000! This is also beneficial because investors didn’t have to work with anyone else except Ellie.
- Utilize the VCI credit offered by Indiana.
- Consider making safe, low-risk investments such as putting funds into a money market account. That way, money isn’t just sitting around, and it’s an additional revenue stream instead.
- Grants, competitions, and raising money work together if you participate in all three, which can ultimately result in more funding.
- Getting grants or showing that you’re grant eligible is a great thing to show investors.
- For competitions, you can build relationships even if you don’t win.
- Showing traction through competitions or PR will help people to feel better about betting money on your company.
- Eligibility for grants varies by industry.
- They’ve had students help with grant writing.
- Their mentor had them create a five-year budget at the outset.
- They’ve left buffers in their budget, but it holds them accountable to their goals. It also shows responsibility and discipline.
- Budgets allow you to plan better.
- They’re always evaluating cost-related decisions, and there is a lot of cost-benefit analyses. They evaluate everything!
- Budgets help to justify purchases and shows that decisions are made carefully.
- They love coupons!
- Larger companies have a lot more luxuries for hiring. The Bee Corp doesn’t use swag or career fairs.
- Salaries are their largest line item.
- When hiring, they talk about the specific benefits of working at a startup.
- They use free versions of platforms to promote all of their available positions.
- Be thrifty! Use job boards.
- Target well-known college programs.
- Not handing out career swag is a filter mechanism. They use it only at trade shows and marketing events. Use cheap swag, and do something that fits your brand.
- Ask questions to determine if someone is a good fit for a startup.
- Ask about someone’s salary expectations upfront to save time.
- Consider using a personality quiz.
USE YOUR NETWORK
- Advisors have been huge.
- Ellie follows up with everyone that people suggest she talk to about The Bee Corp. She usually meets with them at least once. If she really likes them, sometimes she’ll continue the meetings.
- One of their advisors helped negotiate a licensing deal.
- They’ve not had to pay for things because their advisors helped out.
- Have a cool business idea that will attract people. Don’t spend money on consultants unless you’re established and making lots of money.
- All of their advisors get a piece of equity, so they have a real stake in the business. Ellie treats them whenever possible (lunches, cards, coffee, etc.). Listen to their advice. It’s the only way they’ll want to help you.
- Ask for help! They’ve received help on things like their website, logo, software development, hiring, firing, pictures, customers, and product designs. Tell your friends and family what you’re doing!
- If you’re running a business, get used to asking for things and money.
- Classes are good resources.
- Media students will usually provide free help. IU students may present their work to their peers, which could help your hiring process.
- You can actually do some of your work in classes, such as analyzing data.
- Their database was built in a database management class at IU.
- Capstones produce real work. They involve groups of students that work on real stuff for your business.
- Consider consulting projects.
- Try to attend career fairs.
- ISBDC – They got all of their QuickBooks training and set up their accounting. They always hold workshops.
- IEDC – They help with grants and put you with a grant consultant for free.
- BEDC – They’ve got a huge network and host several events.
- There are great resources in Bloomington!
- Listen to podcasts for coupons.
TRADE SHOWS AND TRAVEL
- Collect business miles and points.
- Take advantage of carpooling.
- Stay with friends or use Airbnb.
- Be careful about what you purchase.