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This article was published on January 9, 2023

6 ways EU startups can cut spending during the recession

How to cut spending without layoffs

6 ways EU startups can cut spending during the recession

With a global recession impending, Europe’s startups are feeling the pressure. Investment opportunities are dwindling and customer acquisition is getting harder. So what can startups do to survive during this time?

From hiring freezes to spending cuts, founders are making preparations to get through the recession unscathed. There are many ways to cut spending during this time that don’t involve layoffs, it’s just about being a little savvy and thrifty, and looking out for programs that are designed to give startups a boost.

Here’s your go-to checklist for smart ways startups can cut spending and save during the recession:

1. Scrap the office and go fully remote

Thanks to the pandemic, most people are now accustomed to working remotely and interacting with their teams virtually. Although many businesses have been navigating back towards being in-office at least a few days a week, it costs a lot to hold a space that’s not being 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/year for every person who works remotely half of the time.” For those that go fully remote, asynchronous working will help employees maintain flexibility during the day, and create a work-life balance that suits them and allows them to be most productive.

If you’re worried about maintaining your company culture, gaining some tips and inspiration from businesses who were operating remote models before the pandemic can be useful. Buffer and Zapier, for example, are both remote-first businesses, with global teams collaborating together from all over the world. Both businesses find that maintaining frequent, open communication is essential for the success of their remote teams.

One important thing to remember is that fully remote companies should always factor in some budget for in person team-building events throughout the year to foster team spirit and connection.

2. Choose your cloud provider wisely

Cloud services are used by many startups for everything from basic tasks like data storage, to the more advanced functions like 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 tricky, especially as the business develops and your needs change. Ideally, you’d want the flexibility to be able to reconfigure your cloud architecture or even switch providers as these needs change, however, many startups get locked into contracts with high egress fees.

Adopting a multi-cloud strategy could be a good solution allowing you to select the services most suited to 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, rather than paying for a boost

Did you know, 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 at no cost.

Best SEO practices to help with organic traffic include staying on top of keyword targeting: monitoring analytics of keyword performance will help you to continuously have oversight of what’s working and what can be improved, so you can keep optimizing your approach and improving your reach.

Another strategy is to optimize the landing page itself: making 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 your site.

All of these factors will improve your search engine ranking. In addition to being a cheaper option, organic marketing has a lot of business benefits over paid ads too. When your content is optimized more strategically, it’s likely to last longer and see a prolonged flow of traffic, unlike paid ads that are only profitable when they’re live. It also helps to build a more loyal following as you’re engaging the audience at every step of the funnel.

4. Cast your net in the freelance talent pool

Most companies are introducing hiring freezes, but what if you have some talent gaps in your team that need to be filled for the business to continue developing?

Instead of hiring full-time, consider contracting 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 on an occasional or seasonal basis. Hiring freelancers instead of full-timers can save employers around $11.6 an hour per employee.

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

There’s a wide pool of options to choose from all over the world and, of course, when you find a good and reliable freelancer, there’s no reason why you can’t hire them for additional projects and build up a good relationship as you would with a full-time worker.

5. Declutter your box of tools and subscriptions

In the digital age, companies are using multiple 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’re for. Having a good clear out and canceling subscriptions for anything that’s not being used will reduce unnecessary spending.

There are a lot of tools that have similar functions, so having a browse to compare the offerings might mean that you’re able to find a better deal that suits you and saves a bit of money. Some multi-use platforms and tools additionally consolidate and integrate functions, so you get more bang for your buck rather than having a separate tool for every task/team.

6. Take advantage of funding opportunities

You might be taking all the measures you can to save money, but sometimes an extra helping hand can provide a bit more security. There are several open programs, both EU-funded and privately sponsored, to support startups during the recession and enable them to continue growing and scaling:

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

There’s no need to panic as the recession approaches. Instead, it’s time to get smart about spending, find the best options and discounts available, and always be on the lookout for the many funding programs and opportunities out there!

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