6 ways EU startups can cut costs during the recession

With a global recession looming, Europe’s startups are feeling the pressure. Investment opportunities are decreasing and customer acquisition is becoming more difficult. So what can startups do to survive during this time?

From hiring freezes to spending cuts, entrepreneurs are preparing to make it through the recession unscathed. There are many ways to cut expenses during this time that don’t involve layoffs, it’s just a matter of being a little savvy and thrifty, and looking for programs designed to give startups a boost.

Here’s your checklist for smart ways startups can cut expenses and save during the recession:

1. Scrap the office and go completely remote

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Thanks to the pandemic, most people are now used to working remotely and interacting with their teams virtually. Although many companies have navigated back towards being in the office at least a few days a week, it costs a lot to keep a space that is not used all the time.

Either ditching the office altogether or moving to a co-working space can save a lot of money. Kate Lister, president of Global Workplace Analytics estimates, “a typical employer can save about $11,000 per year for each person who works remotely half the time.” For those who go completely remote, asynchronous work will help employees maintain flexibility throughout the day, creating a work-life balance that suits them and allows them to be most productive.

If you’re worried about maintaining your company culture, it might be helpful to get some tips and inspiration from companies that ran remote models before the pandemic. Buffer and Zapier, for example, are both remote companies, with global teams working together from around the world. Both businesses find that maintaining frequent, open communication is critical to the success of their external teams.

An important thing to remember is that remote companies should always include some budget for in-person team building events throughout the year to promote team spirit and connection.

2. Choose your cloud provider carefully

Cloud services are used by many startups for everything from basic tasks such as data storage, to the more advanced functions such as AI and machine learning. But many also end up in a situation where they accept free cloud credits and end up taking on products and services they don’t necessarily need.

Choosing the right cloud provider can be difficult, especially as your business evolves and your needs change. Ideally, you’ll have the flexibility to reconfigure your cloud architecture or even switch providers as those needs change, but many startups get locked into contracts with high exit fees.

Adopting a multi-cloud strategy can be a good solution that allows you to choose the services that best suit each of your team’s needs and take advantage of reserved instances and other discounts. There are also some new cost-saving cloud technologies on the market now, such as serverless technology and Kubernetes autoscaling.

Also be sure to check out Scaleway’s Next 100 Startups Shaping Europe’s Future Program designed to support up-and-coming startups during the recession. If selected, Scaleway will cover up to 80% of your cloud infrastructure costs over a period of 24 months.

3. Optimize organic reach, instead of paying for a boost

Did you know that around $70 billion was spent on paid search ads in the US in 2021?

Instead of throwing money at ads, focus on organic marketing strategies that will reap the same benefits without the cost.

SEO best practices to help with organic traffic include staying on top of keyword targeting: monitoring keyword performance analytics will help you continually see what’s working and what can be improved so you can continue to optimize your approach and improve range.

Another strategy is to optimize the landing page itself: make sure it has a load-friendly design and user experience (UX), that the content provides value to the audience, and that you have backlinks to help the user move across different pages of the site.

All these factors will improve your search engine ranking. In addition to being a cheaper option, organic marketing has many business advantages over paid ads. When your content is optimized more strategically, it is likely to last longer and see a long-term flow of traffic, unlike paid ads that are only profitable when they are active. It also helps build a more loyal following as you engage your audience at every stage of the funnel.

4. Cast the net in the freelance talent pool

Most companies institute hiring freezes, but what if you have some talent gaps in your team that need to be filled in order for your business to continue to grow?

Instead of hiring full-time, consider contracting with freelancers or agencies to take on jobs on a project basis. Consider which positions you need on an ongoing basis and which you only need occasionally or seasonally. Hiring freelancers instead of full-time employees can save employers about $11.6 an hour per employee.

In addition to financial benefits, outsourcing is a great way to access different skill sets, expertise and strengths tailored to specific projects in a way that is not otherwise possible.

There is a wide variety of options to choose from all over the world and of course, when you find a good and reliable freelancer, there is no reason why you cannot hire them for more projects and build a good relationship as you would with a full-time worker.

5. Clean up the box with tools and subscriptions

In the digital age, companies use more tools and apps for their business operations. Sometimes we have so many tools and subscriptions that we don’t even remember what they all are or what they are for. Having a good release and canceling subscriptions to anything that is not used will reduce unnecessary expenses.

There are many tools that have similar features, so looking through to compare the offers could mean you can find a better deal that suits you and save you some money. Some multipurpose platforms and tools also consolidate and integrate features, giving you more bang for your buck instead of having a separate tool for each task/team.

6. Take advantage of financing opportunities

You may be taking every measure you can to save money, but sometimes an extra helping hand can provide a little more peace of mind. There are several open programs, both EU-funded and privately sponsored, to support start-ups during the recession and enable them to continue to grow and scale:

  • For example, the European Innovation Council (EIC) has a range of funding opportunities to support everything from research and guidance to building business plans to scale and develop for the market.
  • As mentioned earlier, Scaleway’s 100 Startups program provides support for cloud funding for 24 months.
  • Climate-KIC has a number of grants available specifically for startups that accelerate the transition to zero carbon and climate resilience.
  • For low-tech SMEs looking to develop AI techniques, StairwAI is a good option.
  • Eurosearch is a great place to find a variety of funding opportunities, specifically tailored to different types of startups.

There is no need to panic when the recession is approaching. Instead, it’s time to get smart with your spending, find the best options and discounts available, and always be on the lookout for the many financing programs and opportunities out there!

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