6 Things Startups Overpay For That Kills Profitability

After all is said-and-done, maximizing your bottom-line profit is the only path to higher salaries, larger distributions and eventually a lucrative exit.

Sure there are plenty of guides on the best ways to start a business and optimize a business. But there are very few guides on how to reduce business expenses, especially in areas where you’re clearly overpaying. The lower your unnecessary expenses are, the higher your profit is, and maximizing profits is an important goal to have.

Here are six things that startups and small businesses are routinely overpaying for, and how to get a better price–

Overpaying for Zipcar and other rental cars

Potential savings: 40%+
Did you know that Zipcar and all the major car rental companies have business accounts that you can sign up for? Among the many benefits of having a corporate account is getting significantly cheaper rates, sometimes up to 40-50% lower. And if you couple that savings with these tips from a former Enterprise rental salesman, you’ll be paying a fraction of what you usually do for car rental. Signing up for a corporate account is as easy as visiting the rental company’s website.

Overpaying for UPS and FedEx

Potential savings: 20%+
If you sell physical goods, shipping costs can make-or-break your margins. So being able to save 20-30% on your shipping costs can be a huge boost for your bottom line. The size of your potential savings here is a function of your shipping volume, but I’ve seen companies that rarely ship anything get an automate rate of 15% lower than retail rates. Call up UPS or FedEx, create your corporate account, and save on your shipping costs immediately.

Overpaying for LTL and Truckload Freight

Potential savings: 60%+
If you ever ship pallets from point A to point B, don’t go through a shipping company directly– go through a freight broker like Echo Global instead. These freight brokers move a significant amount of volume with a number of freight providers, allowing them to negotiate significantly cheaper rates, which they pass along to you. They also manage the process for you, and can help with other aspects such as customs, tariffs, pickup and drop-off scheduling and paperwork.

Overpaying for Furniture & Office Supplies

Potential savings: 70%+
Do you really need a brand new desk? Printer? Office chair? You can find almost anything on Craigslist at unbelievably low prices, so mine as well take advantage of the opportunity and save money on office furniture and office supplies. And remember, everything on craigslist is negotiable, especially if you reiterate that you can pay cash and pick it up as soon as possible at their convenience– people value a quick and easy sale. You can expect to pay 30-40% below listed prices, which comes out to about 90% off MSRP.

Overpaying for PPC ads

Potential savings: 10%+
It’s so easy to set your PPC campaigns on auto-bid. However, this doesn’t take advantage of potential cost savings of really optimizing your campaigns. Proper protocol suggests that you first structure your campaigns, ad groups and ad sets properly in order to maximize your quality score, then you very incrementally lower your bid manually to squeeze out every penny.

Overpaying for Custom Websites and Software

Potential savings: 90%+
It’s tempting to think that your startup’s particular situation is unique and that you need a custom solution in order to operate efficiently. But unless you have a MASSIVE budget — and even if you do — custom websites and custom software most likely aren’t necessary. Just look at how many successful companies run on standard or premium Shopify templates. You’d be surprised how many pieces of software are out there that are powerful yet flexible enough to meet your exact needs. The best part about using off-the-shelf software is that they’re usually updated very frequently, have little to no known bugs and are extremely affordable. Best place to start looking would be our essential list of startup tools.

We’ve also put together lists of WordPress themes we recommend that are much more affordable than building a custom theme, and usually look better and have less bugs then custom themes as well:

Free WordPress Themes We Recommend
Free One-Page WordPress Themes
Free Magazine & Blog WordPress Themes
Free Woocommerce Themes

Premium WordPress Themes We Recommend
Premium One-Page WordPress Themes
Premium Magazine & Blog WordPress Themes
Premium Woocommerce Themes

What other cost savings are startups and small businesses routinely forgetting about? Have any suggestions? Leave them in the comments below!

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Stephen Steinberg

Stephen Steinberg

Stephen is the Founder of Vapor Fresh, a line of safer plant based cleaning products for the sports & fitness industry, as well as Founder of Animate Yerba Mate, a brand bringing quality unsmoked organic Yerba Mate teas to the USA.