Cutting IT costs when you start a business

Starting a business has, arguably, never been easier. In fact, you’ll find thousands of articles that are based around bootstrapping a startup business – the trouble is, almost all of those articles miss out one crucial element: IT.

Whichever way you approach it, IT is going to cost you money. For many companies, IT represents their biggest outlay, both in the time before they open their doors – to the on-going operational expenditure they make year on year.

So, how do you work around the need for big-money outlays on tech? You’re never going to mitigate the cost altogether – but there are a handful of ways you can slice that spend down to a more manageable level.

Find external IT support

A lot of the cost that’s involved with IT is down to the staff that you’ll need to support the network that’s going to keep your business running. In fact, small businesses that keep their IT support in-house generally report that 70% of the money they spend on IT goes on the people that actually put the network together – or answer the phone when something’s not working.

The truth is, supporting a business IT network is a lot of work. In fact, it’s likely to be too much work for just one person. Even if a talented individual can get you up and running, supporting your network is often a round-the-clock job – making it downright impossible for one, two, or sometimes even three people to keep on top of.

Not only do you need a number of people to support your IT, they very obviously need to know what they’re doing – which leads us to an interesting problem. Taking on IT staff can sometimes limit the breadth of their experience going forward; they become very good at administering your system, but less able to stay on top of the developments in the wider world.

So, what do you do if you want to sidestep some of these issues? Increasingly, companies are turning to managed service providers to set up and administer their IT. It’s not just your devices and business network that you can find support with either; some of the larger and more well-equipped services will even help you to develop and run your own applications for tasks and services that are unique to your business.

The beauty of working with an MSP is the sheer size of the service they are capable of providing. Chances are, they will have a significant size team – so cover is always there for you, and, the fact that they work with a broad range of clients means they’re always at the cutting edge of their field.

Make no mistake, the cost of creating and maintaining your own effective IT team is likely to be enormous – but a managed service provider will slice that cost right down. You’ll sign a service level agreement that outlines exactly what they’ll deliver – and, in exchange, you’ll hand over a monthly sum to keep them onside. That cost? It’ll vary on a huge range of factors – but you’re likely to be around one-sixth of the cost you’d expect if you wanted to recruit, train, and keep your own team.

Work with open-source software

Take a quick glance over a list of the most wealthy tech companies in the world and it’ll come as no surprise to find software houses like Oracle, Cisco, SAP, Salesforce and occupying some of the top spots. Providing software for organisations is enormous business, in fact, it’s like providing the air that businesses breath – without it, they simply couldn’t function.

Or could they?

The truth is, they probably could – it’s just that premium software creates a huge self-propagating marketplace. For instance. Microsoft create Office, which becomes a cornerstone part of how most businesses run. Moving away from Office becomes increasingly difficult – then, as costs change, many businesses simply do not have the time of resources needed to find and implement an alternative.

But don’t misunderstand – there are alternatives, and many of them do an equally good job – at a tiny fraction of the cost (and, often, for free).

Open-source software isn’t just a way of tracking down free applications – it’s a completely different approach to software and IT – one that suggests software should be free, with just changes and personalisation costing businesses money. If the idea of shedding those software costs sounds good, it’s worth exploring a resource like SourceForge, and explore the low-cost and free application alternatives that are out there.

Embrace ‘as-a-service’

Until recently, buying IT infrastructure meant purchasing devices that made it possible to run the services you need. Require an email exchange? No problem; buy the server and have it configured by a network engineer at your site. In fact, the same was true for a huge raft of tech – including software, storage, and a sprawling list that you simply could not operate without.

This represented a difficult pill to swallow, especially for small businesses with limited budgets. Big infrastructure like this cost thousands – but, without it, you had no network.

Now, thanks to enormous leaps forward in the practicality of cloud-computing, this is simply no longer the case. Virtual services power even some of the biggest businesses. Next time you watch Netflix, you’ll be streaming your boxset from an Amazon Web Services server somewhere. Expect Samsung to have their own infrastructure? Again, you’ll find that a lot of their data comes to you via AWS.

Now, virtually everything is available ‘as-a-service’ – that’s to say, not owned by your business as such; instead, just accessed through your internet connections and paid for on a ‘rental’ basis. While this kind of access is normal for software, it’s becoming increasingly popular for both bulky infrastructure and development platforms too.

So, next time you find an eye-watering price tag attached to a device, platform or service, look into the possibility of accessing that resource remotely. Afterall, that also means you’re passing the smooth running of that service to someone else – one less thing for your new managed service provider to worry about.

How on-demand CNC machining can reduce production costs

3D Hubs is the category leader in on-demand CNC machining services. With a CAD file and a single click, engineers can receive a free Design for Manufacturing analysis and generate an instant production quote; other manufacturing methods like 3D printing and injection molding are also available. Use the world’s best online CNC manufacturing and 3D printing service to source parts for the lowest price possible.

The advance of on-demand CNC machining

The CNC machining industry used to be the sole purview of individual shops and expensive bulk manufacturers. Designers needed to find a producer with the appropriate technology, negotiate an affordable quote, and wait for their product to be created after a backlog of other orders.

Thanks to the advent of cloud technologies and artificially intelligent software, CNC machining can now be sourced almost completely online. Companies like 3D Hubs use digital tools to provide instant quotes and alongside detailed manufacturing analysis. Products are sourced from the best possible manufacturers across the globe, and designers are always connected with nearby producers who can complete each order with a short lead time.

The progression of technology has made on-demand manufacturing more than just a possibility. Design a part, upload a file, and receive a finished product faster than a local shop can deliver the initial quote. Short lead times and a simple manufacturing process result in lower costs than ever before.

Why on-demand machining services are better

When given the choice between local CNC production or on-demand CNC machining, the decision is obvious. Short lead times, cheap production costs, and outstanding results can all be achieved with the click of a button.

Infinite order capacity

• Infinite order capacity – Don’t wait for a single shop’s CNC machine to work through a backlog of orders. Order as few or as many parts as needed at any given time. 3D Hubs partners with multiple manufacturers to complete each order as quickly as possible.

Instant quotes

• Instant quotes – Know how much your order will cost as soon as you upload your design. 3D Hubs’ machine learning software analyzes each digital file to create an accurate production cost. Use this information for quick budgeting and even quicker production times.

Design flexibility

• Design flexibility – On-demand machining offers an extremely wide range of materials and processes. Use 3D Hubs’ Design for Manufacturing tool to create complicated yet viable designs. The free DfM analysis will identify design flaws and suggest improvements to make the model more suitable for traditional machining methods.

Cost-effective production

• Cost-effective production – 3D Hubs’ on-demand manufacturing system delivers high-quality products for the lowest possible costs. Skip the fees associated with expensive sales representatives and complicated internal structures. Instead, work with a company that has increased negotiation leverage and can source parts from the most affordable manufacturer.

Get a CNC quote today!

Turn any design into a reality with 3D Hubs’ online manufacturing tool. Simply upload a file, select CNC machining, and choose the best materials and preferences for the design. The manufacturing tool will generate an instant quote and estimated lead time; confirm the quote to start the manufacturing process.

3D Hubs is the world’s best provider of on-demand CNC machining and 3D printing services. Use our intelligent cloud-based platform to reduce production costs and receive finished designs faster than ever before.

Photo by ZMorph Multitool 3D Printer on Unsplash

Over 70,000 shop workers lose jobs as online sales & automation take hold

About 72,000 people lost their jobs in the retail industry in the past year as it has been hit by online shopping and automation.

The British Retail Consortium said the number of employees dropped 2.3 per cent in the second quarter of the year compared with the same period in 2018. It marked the 14th consecutive quarter of year-on-year decline.

Retail is on the front line of social and technological changes, with consumers increasingly spending their money on experiences rather than products, and purchasing more online. Roughly 18 per cent of all British retail sales are over the internet today.

Online sales have reduced demand for shop staff and stores are cutting costs by investing in automation, with self-service checkouts now common. Wage costs and business rates have also hammered the sector, with high street names such as HMV and Debenhams going under.

“We have seen retail employment falling across the country,” Helen Dickinson, chief executive of the British Retail Consortium, said. “Such declines are likely to endure, hastened by government policies that continue to add costs to an industry already under immense pressures.”

The consortium has been a fierce critic of business rates, which are charged on premises and disproportionately hit the industry. It said retailers accounted for 6 per cent of GDP but paid 26 per cent of business rates. The rates raise more than £30 billion annually, about the same as council tax.

A higher national living wage has also added to retailers’ costs and has pushed them to invest in automation to bring down pay bills.

The consortium found that job losses were greatest among full-time staff. They suffered a 3 per cent decline year-on-year compared with 2 per cent for part-time employees, as retailers appeared to prize flexibility.

Total hours worked fell by 2.5 per cent, with full-time hours being reduced more than part-time hours. Space taken by stores rose 1.7 per cent, which was down from 2.3 per cent in the first quarter, but the consortium said shops were serving a different role, “centred more on customer experience and offering social activities, for which fewer staff are needed”.

Households are also spending less in the shops. In a report published this month, the CBI, the business lobby group, found that retail sales volumes fell at their fastest pace in a decade in the year to June.

Ms Dickinson urged Boris Johnson to make retail a priority. “With a new prime minister and cabinet in place, there is a clear opportunity to rethink the high street strategy,” she said. “Business rates pose an unsustainable burden on shops and jobs.”

How to reduce the costs of recruitment

Recruitment is all about gaining an innovative and competitive edge by having the best people working for your company.

In most companies around the world, recruitment therefore takes a huge chunk of the overall operational costs.

Our new research has found that up to a third of new employees aren’t passing their six-month probationary reviews, costing companies thousands of pounds and creating long-lasting negative effects on businesses. In fact, on average, businesses spend £6459 a year on recruitment and hiring. If a candidate doesn’t work out, not only are these fees lost, but the salary for the probationary period is also wasted – not to mention the time you and your team has spent interviewing and on-boarding. With the average advertised UK salary being £35k (according to Adzuna), this equates to at least £17k lost over a six month probation period.

As a business owner, it is crucial to understand how much recruitment is actually costing your company – and to identify the biggest hitters – before you start searching for smarter ways to recruit and reduce these costs. Some of the direct costs to recruitment include turnover, HR Administration, job board fees, agency fees and advertising budgets, onboarding budget and processing costs. Once you have identified which areas of the recruitment process you are spending the majority of your money on, you can then hone in on those areas to save money.

Gone are the days when money was well spent on traditional advertising – you could get an advert on Monster or Indeed and feel pretty confident that the best and brightest candidates would fill your inbox with CVs. But not today, because the top talent is already at Google, Facebook or one of the sexy, leading startups such as Onfido, Revolut or Pleo.

There’s no quick fix like a traditional advert anymore, and cracking the code to building world-class teams is not done overnight. To embark on a future-proofing journey that will help you create a modern, flexible and highly skilled workforce, there’s a few questions that should be front of mind before you start out:

1. Do you hire the right people in the first place?
2. Do you incentivize them to stay for long enough (but not for too long!)?
3. Do you measure how motivated your workforce is so you can increase their performance?
4. Do you work with a blended workforce of both freelancers and permanent employees?
5. Do you embrace the latest in recruitment technology?

Not sure how to find the answers? Here’s my top tips for you…

1. Do you hire the right people in the first place?

If you hire the right person in the first place, you can save a lot of time in finding a replacement in the future and just focus on how you can grow and retain them. It might sound like I’m stating the obvious, but our research demonstrates that the traditional recruiter method of securing talent is simply no longer working – companies aren’t getting the right person, first time around. Organisations clearly feel that traditional recruiters lack knowledge in terms of what their business involves and what they need in a candidate. In a fast-moving world, where getting the right skills at the right times could mean the difference between success and failure, any lack of understanding can cause real and expensive damage. Worryingly, the research also found that only 8% of businesses feel new hires have all the skills needed for the job.  It’s clear, therefore, that businesses really need to spend more time looking at what talent they need, and using an approach that looks into the biggest talent pool available if they are to have the best chance of getting the right person first time around.

2. Do you incentivise them to stay for long enough (but not for too long!)?

Our research has found that over a quarter of businesses prioritise cost over quality when it comes to recruitment, but 21% say they later come to regret that decision. It’s good to offer a competitive salary package right away so you don’t waste man hours by forcing recruiters to negotiate and re-negotiate with potential candidates. Also by giving staff slightly above-average salaries, you are basically saying that you expect above-average effort! The larger salaries will generally incentivise a culture of better work output – plus they are less likely to want to leave – saving you money on recruiting again.

Paying people what they deserve will cut your recruitment costs overall as you have a higher skilled and more dedicated workforce. Whether you hire freelancers or permanent employees, remember that quality work costs money, so be prepared to pay. If you want to save money, you should seek to cut out or negotiate lower fees to your recruitment partner (saving you 15-25% of the yearly salary).

Taking it a step further, more companies – in my opinion – should grant shares or warrants to employees so everybody truly has an incentive to give it all they’ve got.

3. Do you measure how motivated your workforce is so you can increase their performance?

When you have managed to attract the right people and pay them enough, you’re only halfway there. The reason is that for the skilled labor force, money can only motivate up to a certain point – and most people with skills in high demand have no worries over money and would happily go for a lower paying job if it brings them unique learning and development opportunities, as well as great culture and lots of flexibility.

To start working proactively with motivating your workforce you need to know how motivated they are in the first place. Use tools such as Peakon (known for providing one of the best digital platforms for measuring employee engagement) and Thrive Global (solutions for enhancing employees’ health and performance) to know how your culture and work environment impacts your employees. If they’re not happy, you’ll want to know why. If they’re happy, you’ll also want to know why. Not knowing if they’re happy or not, and not knowing why will kill your company.

4. Do you work with a blended workforce of both freelancers and permanent employees?

Most companies in the UK severely struggle to find the competencies they need to keep their businesses running – especially in across the Tech and IT landscape. To gain a competitive edge, businesses must tap into the flexible labour market to future-proof themselves against any upcoming skills shortage. According to the 2018 Talent Shortage Survey, large companies in the UK with 250+ employees have the most difficulty filling job vacancies, with 50% of employers experiencing skills shortages. Large companies account for 0.1% of businesses, but they employ 40% of the total workforce. This demonstrates the significant impact this skills shortage has on the wider labour market. SMBs are feeling the pinch too, with 45% struggling to find the competencies they need to keep their businesses running.

Leading companies not only use freelancers to put out fires and cover the gaps, but proactively work to find the best and most skilled freelancers to work in sync with their permanent workforce. They understand that it doesn’t matter so much what the contract says (perm or freelance), but that going for the right skillset is far more important.

Having a +30% share of the workforce on freelance contracts is not uncommon amongst fast growing tech, creative and IT companies. This share will likely grow in the coming years, so it’s better to get on top of finding, hiring and managing freelancers efficiently sooner rather than later.

5. Do you embrace the latest in recruitment technology?
   Using technology alongside or instead of the traditional recruitment methods is the best way for hiring managers to access the talent they need in a smarter and more sustainable way. The right recruitment-tech can help businesses validate and hire talent more quickly and more affordably than traditional recruiters or job boards. Depending on your location, industry and the roles you’re hiring for, you should check out the latest in:
   a) crowdsourced recruitment (where you ask a big network of people to recommend people and give referrers a referral bonus if you hire who they recommended);
   b) freelance marketplaces (that uses AI to match your specific role with thousands of available freelancers in your city to speed up hiring and get access to a new labor-pool);
   and c) tools like The Dots (big network of creatives) and skill-specific Slack and Reddit groups where people gather to get geeky.

And here’s one final extra tip… take advantage of social media

The ability and willingness to communicate socially allows an employer to provide an insight into their day-to-day operations, their vision and values, and the type of people who work there. This transparency and authenticity will help to increase the volume of applications you receive from individuals who are already confident that they’ll fit your culture and share your vision and values.

Best of all, social media can be (almost) free – all you need to invest is a little time in putting together the right messages and campaigns, and interacting with your followers. You can of course opt to pay for advertising campaigns to target specific audience groups if you want to take it a step further.

When you’re just starting out, the trick is to choose to focus on the most appropriate channels for your audience, rather than every possible platform. You’ll probably find that LinkedIn is the most relevant to your recruitment strategy. If you’re not sure what techniques are most effective on social media, turn to the countless blogs that cover the subject, or ask your marketing colleagues for support and advice.

Mathias Linnemann

Mathias Linnemann is the Co-founder of Worksome, an online platform that matches companies with on site freelancers and contractors using new technology. Before founding Worksome, Linnemann worked as Industry Manager at Google for 6 years with the responsibility of handling Google's clients' digital transformations. He has a Master of Science in Innovation & Business Development from Tsinghua University in Beijing and from Copenhagen Business School.

How digital marketing teams can cut costs

When a marketing budget is bursting at the seams, it can be tempting to make big changes, but these are more like knee-jerk reactions than strategic decisions.

It may be that cuts are necessary for some areas, but before you make any drastic cuts to your team’s resources or consider losing staff, try not to panic. It’s likely that several smaller changes will add up to a more significant saving than you might think.

Making your current processes more efficient and giving employees the tools they need to improve productivity can have significant benefits. Here’s how digital marketing teams may be able to cut costs in simple but effective ways.

Embrace Automated Marketing

A big drainer of time in marketing is the small tasks which eat into your day and prevent you from focusing on the activities that result in profits. Luckily, there are lots of tools now which take a lot of the administration away from your day via automation. There are plenty of social media scheduling tools available, and these can manage your communications and publish content at the best time.

There are also chatbots which can respond to frequently asked customer questions. Mailchimp and Marketo enable you to create and send email campaigns to a schedule and feedback the key statistics so you can analyze its success. Automation and artificial intelligence is not a replacement for humans, but it can definitely take the strain off and give your staff more time to focus on what makes the business profitable.

Don’t Work Harder, Work Smarter

This is particularly relevant to marketing agencies, but it’s also a good lesson for any marketing team. Make your interactions with clients as meaningful as possible by ensuring both you and them are working towards the same objective and tracking the same measures of success. When you do meet to discuss progress on a specific project, you need to be on the same page and can understand exactly what matters to your client from the outset.

In terms of team communication, try to reduce the number of trivial emails by introducing instant messaging tools like Slack, which will streamline inboxes and keep projects flowing.

Find Cheaper Office Supplies

Even digital companies need office supplies, and all too often, we spend too much on the products we use. It could be because we are convinced certain brands are better than others simply because they charge more, or it could be because we have been with the same supplier for a long time and just accepted the price increases. It’s always worth taking some time to shop around and see if you can find a better deal. Visit www.cartridgepeople.com to see if you could be paying less for paper, ink, toner, computer accessories, and stationery.

Target Your Strategy

You could spend a fortune on marketing and generating sales leads, but if the people you’re attracting to your business aren’t likely to buy from you, you’re going to be wasting money. You may be targeting an audience which is too broad, so consider looking at more concentrated, smaller segments. Your audience research should be based on data and not assumptions, but make sure you’re looking at more than age range or professions.

Customer insights should also include buying habits and lifestyle information such as the TV shows they like to watch. It will enable you to create a more bespoke marketing campaign which is more likely to return new customers. Consider using online surveys and customer interviews to gather this information and use it to create customer personas. You will be able to increase your customer understanding on a deeper level.

Lose What’s Not Working

Not every marketing channel is the right fit for every business. For example, many companies spend a lot of time working on creating content for social media platforms when, in reality, this is not where their target customers will be found. You may be spending a week or two collating a monthly email newsletter which doesn’t actually result in any extra business or engagement.

Take an objective look at all your channels and see which is most profitable. That’s where you should be investing your time. You don’t necessarily need to stop using the underperforming channels altogether, but you should make sure you’re using your time and money wisely.

Use Free Marketing Tools

Digital marketing is simply bursting with new online tools and platforms designed to help both agencies and companies to improve their operation. This could be a tool for keyword research like answerthepublic.com or an email marketing platform. Some tools require a subscription fee to open up all their functionality, service support, and intuitive interfaces, but there are lots of free tools out there too.

If you are paying for subscription-based tools, do some research to see if there are any free tools which offer a similar service. Try the free tools for a while to ensure they provide all the features you need, but you may find that you can save a lot of money by using simpler versions.

Go Remote

While remote working isn’t right for every business, it can offer some great benefits to modern teams. It’s never been easier to communicate from email and video conferencing to online instant messaging. By enabling team members to work from home or premises, which are more convenient for them, you are giving your team more flexibility, which is great for morale.

It could also reduce your overheads as you won’t need to furnish, rent, heat, or cool a workspace. You can set specific weekly meetings when the whole team comes together in a virtual meeting space.

Measure Your Performance

If you are spending chunks of time on specific tasks and you have no way of tracking whether or not the time has resulted in new customers, you need to rethink. This also goes for all the cost-cutting changes you’re about to make. You need to be able to test whether or not what you’re changing is having a positive impact on your business. Marketing teams are well-used to A/B testing, so make changes gradually and only rollout those which are proven to be a success.