Finding Cost-Saving Tips is a top priority for companies, especially startups, as they manage their operations. But should cutting costs come at any price? Is compromising on quality for cheaper solutions truly worthwhile? In this article, I’ll share five practical ways to save money while keeping standards high for your business.
I. A Lesson in Cost Management from SpaceX
SpaceX serves as a prime case study of ineffective cost management that leads to severe consequences. On September 1, 2016, during a routine engine test on the launch pad, SpaceX’s Falcon 9 rocket was destroyed along with Israel’s Amos-6 communications satellite, which it was supposed to put into orbit.
This incident cost SpaceX a $200 million satellite, damaged infrastructure at Cape Canaveral, and delayed their launch schedule for six months. During that time, SpaceX couldn’t proceed with any further launches and they had to cover the costs of NASA’s investigations. Reports later revealed that, in an effort to save time and money, SpaceX made some changes to their design and testing process without conducting thorough tests to assess potential risks.
On a much smaller scale, in the world of digital transformation startups, founders sometimes take on multiple roles within their company—not only acting as CEO but also as designer, programmer, and even salesperson. They often tend to hire students or part-time workers at low wages to write code or even handle everything themselves from A to Z. Only a very few of them achieve success, while many others find themselves disoriented.
II. 5 Effective Cost-saving Tips
If you have a digital transformation or tech startup idea, here are some strategies to help you save costs without risking bankruptcy like Elon Musk:
Start with the question “Why?”
Before starting, you need to thoroughly evaluate your idea and constantly ask, ‘Why?’ Determine why you chose this project over others, what you stand to lose if you don’t pursue it, and what risks you’ll face if you do. This reflection is key to avoiding a project that wastes resources, time, and money
Asking “Why?” also ensures you’re fully aware of the necessary resources and potential risks you’ll encounter. Once you have solutions for resource allocation and risk mitigation, you’ve already secured 40-50% of the project’s success.
Identify the right MVP
MVP (Minimum Viable Product) is the most basic version of a product, designed to attract initial users and gather valuable feedback without risking bankruptcy by cramming every possible feature into it. Defining the right scope for the MVP not only saves time and resources but also helps you focus on the essential features, preventing the creation of a product that tries to meet everyone’s needs.
To define the right MVP, apply the Design Thinking approach. Specifically, Design Thinking involves identifying the appropriate potential customer base and understanding their most urgent needs. From there, the MVP should effectively address those needs.
Choose the right technology
A close friend of mine, a Solution Architect, recently shared a story about a startup seeking help to save their delayed MVP product. The founder, who did not come from a tech background, hired a part-time team to develop an MVP which is a blog that included a few services and online payment options via PayPal. Instead of using the WordPress platform that could build a full-featured website in a few days, the team proposed a complex cloud architecture. After presenting the solution, the team vanished, leaving an inexperienced Dev struggling for over six months with no progress. The costs for servers increased significantly, and more importantly, they missed the opportunity to enter the market. The problem was only resolved in a matter of days when my friend joined in the project.
Ultimately, users don’t care whether the technology you use; what matters is that it works and meets their needs. Don’t “use a sledgehammer to crack a nut”—keep things as simple as possible. If you’re not a tech founder, find a reliable consultant. If you haven’t found such a person yet, keep searching.
Maximize reuse wherever possible
Reusing the first stage of rockets is the secret to SpaceX cutting launch costs from hundreds of millions to just tens of millions of dollars per launch. In the field of software development, you can apply similar methods to save months of work compared to building from scratch. Additionally, using well-tested and optimized components, like libraries and frameworks, not only ensures the stability and performance of the product but also reduces technical risks. Moreover, focusing on reuse allows developers to devote more energy to innovating and optimizing unique features, thus increasing the product’s competitiveness in the market.
To reuse effectively, it’s essential to recognize which components can be reused and ensure that those components in the old system are modularized that allow easy integration with minimal adjustments. How to do this efficiently depends on your tech team—or if you don’t have one, “Find a trusted expert!”
Choose a quality development partner
If you are an experienced tech founder or have a quality in-house tech team, this section may not be relevant to you. If not, you will likely need to find an external partner to consult and help develop your product. In that case, all the points from 1-4 can only be satisfied if your partner is a genuinely skilled and dedicated team. Whether it’s an individual or a company, what matters is that they have the expertise and professional work processes.
Be cautious if you hire students or rely on part-time workers to turn your dream into reality, as the costs you may incur later can be much higher, including the time and money spent fixing a product that doesn’t work. If you hire a company, let’s compare solutions and prices among different providers, as they can propose vastly different approaches and costs. As the decision-maker, it’s important to make thoughtful choices.
III. Conclusion
Cost-saving is crucial for businesses, especially startups, and it’s important to do it wisely. The five strategies outlined above can help you save costs while optimizing resources and minimizing risks, ensuring that your business completes its product with maximum efficiency. The most important thing is to assess your business situation accurately to choose the most appropriate method. I wish businesses and startups success in saving costs in their digital transformation or startup projects.
