After you’ve made the decision to start your own company, and have gotten past some of the early emotional hurdles, the next issue that comes up is usually money. Specifically, how you can you use the money that you have - which is usually limited - and make it last as long as possible. In fact, when Jessica Livingston asked the founders that she interviewed for the book, Founders at Work, about their advice for would-be entrepreneurs, it was often “spend as little as possible.” (All the quotes that are used here are from that book.)

Here are five great ways to save money with your start-up:

1) Take as little salary as possible. When I quit my job to start Pure Incubation, I took a huge pay cut. I didn’t go salary-free, but Chris and I came to an agreement about the lowest salary I could take so that we could still afford to live the lifestyle that we wanted. I still take trips, I still eat out, but we have cut back in a lot of areas. Some people are even able (and willing) to not take a salary at all. Obviously, if you can go this route it’s ideal. Overhead costs from salaries often are a huge burden to businesses, and the lower the salary you take, the longer your money will last.

Some people aren’t able to take such a huge pay cut, so they keep their day jobs. This works for some people, who either don’t work long hours, have a job that isn’t very demanding, or don’t need to put in a ton of hours to get their business off the ground, either because they’re patient, or their business/idea isn’t time-sensitive. This is a great way to keep your salary down if you can do it - essentially, you’re being paid by the company for which you’re working 9-5, which is helping to support your start-up.

“We were…both working, so we decided to spend all of the time on the weekends and evenings building this product. Then it came to a point that one of us had to quit our job to focus full-time on it, so I told Jack, ‘I’m single and don’t have a family. Why don’t you quit and start working on this and I’ll give you half of my salary?’ So at least he could support his family. I didn’t need that much money.” - Sabeer Bhatia, cofounder, Hotmail

“Initially we put in a little bit of money, I think $25,000 each. If you don’t take a salary, that can last you a long time.” - Arthur van Hoff, cofounder, Marimba

2) Don’t get traditional office space. I live in a two-bedroom apartment. It’s a great apartment, second floor, ocean view - and it’s plenty of space for me and Chris. When I first started thinking about starting a company, I was planning on setting up shop in our second bedroom, which is where Chris worked when he was starting his company. But as I looked at the space, I realized that I wouldn’t be happy in that room. So I got a new desk (from IKEA, definitely don’t spend a lot of money on office furniture!) and it matched the rest of the house well enough that I could set it up in our sunroom - the view from my office is of the ocean and I love “going to work” every day.

If you have a space in your house that you use for your office, do it. After overhead, the next biggest cost of business is often office space - and renting office space is like throwing money out the window. If you work with other people, see if they can work from home, too. Use IM, email and phone calls to communicate, and have meetings at your local coffee shop or at your dining room table.

If you must be in the same location, find as inexpensive a space as possible. When Chris got his first office, it was a tiny little space that cost about $400 per month in the Cummings Center, a converted shoe factory in Beverly, MA. But the great thing about that space is that there are hundreds of other office spaces in the building, so when he outgrew the space (which happened quickly), he was able to transfer the lease to a bigger office. The other great thing about the Cummings Center is that it’s close to the commuter rail, so when he needs to hire more people, he can look in Boston, as well as the outlying communities for talent.

“[We worked] in Robert’s apartment. His housemate was away that summer, and I moved into his room. Robert used to get up early, whereas I stayed up till four and got up at noon. So we would kind of work a 24-hour schedule.” - Paul Graham, cofounder, Viaweb

“We had a friend who was subletting a space, and he had a contract job that kept him out of the office all the time, so we sublet his subletted space. This was in 2002…there were failed dot-coms all over the place, so office space was cheap.” - Caterina Fake, cofounder, Flickr

3) Hire contractors vs. full-time employees. There are many reasons to start off hiring contractors vs. full-time employees. For one thing, contractors usually expect to work from home (allowing you to forgo the office space), and they often have their own equipment. Employers aren’t expected to pay for healthcare or 401k costs for contractors, and if you hire a contractor and they aren’t doing a good job, you can fire them without paying a severance or feeling completely terrible since contract work, by its nature, isn’t permanent. Chris’ first full-time hire didn’t end up working out, so he had to let her go, and it was one of the most traumatic things that he had to do in the early days of his business. He didn’t sleep for a week, and they ended up paying her a month’s salary in severance (mostly out of guilt, I think). Since then, he’s started hiring contractors and moving them to full-time when he’s ready.

I’m currently working with about 20 contractors. I’m the only full-time employee, but I am still able to get everything done, and I don’t have the worry about overhead depleting my bank account. And if there is a month when money is tight, I can cut back on contractors. Plus, often when you’re starting out, you don’t need 40 hours a week of a specific skill set - or if you do, it’s a temporary thing that will end after a project is complete. It is only when your business is at a point when it needs a dedicated 40 hours per week committed to a specific task or set of tasks that it’s time to hire a full-time employee.

“One of the things that I did…with Bloglines was rely upon an outsourcing site, in this case eLance, for a lot of things…So, if I wanted to put together a presentation and I needed a couple of graphics, I put up a proposal on eLance and ended up working with some lady in Australia who turned things around in 6 hours, for $50. So sites like that are so amazingly powerful, which is just one more reason why it’s really easy to do very small companies, because you don’t need a graphic designer necessarily.” - Mark Fletcher, founder, Bloglines

4) Cut back on everything you possibly can. The other places where you can really save money will be different for every business. For me, I have kept expenses down by taking a chance on some less-experienced writers and designers who are working on building some of my sites and writing content. When I need a stellar design that only someone with vast experience can pull together, I’ll hire that person - but until then, I’m comfortable with getting my business cards designed professionally for $150 and printing them out at Staples (on high-quality card stock, of course). Other people find other areas to save.

“Do everything as cheaply as you possibly can.” - Paul Graham, cofounder, Viaweb

“Reduce. Do as little as possible to get what you have to get done. Do less of it; get it done.” - Joshua Schachter, founder, del.icio.us

“Even if you raise money, spend it as if it’s your own and you have none. Your organization has got to remain smart and lean. Be cheap. There’s no shame in being cheap. I still fly coach.” - James Hong, cofounder, HOT or NOT

“We basically sat in the garage coding for around 18 months. In retrospect, it was really fun…It got cold in the garage and we didn’t have a heater, so we would use the dryer for heat. We’d tape the little button down that made it run with the door open.” - Joe Kraus, cofounder, Excite

5) Take on some contract work. This isn’t exactly a money-saving strategy, but it is a way to build a little extra cash, which amounts to the same thing. I have been offered a number of contract projects since starting Pure Incubation, most of which I’ve turned down. But on a selective basis, I have taken on a few projects. The ones that I’ve chosen have either been in my power alley of experience (meaning that I didn’t have to work too hard to get them done and could charge a premium for my expertise), or have allowed me to be paid to extend my skill set in an area that I didn’t previously have experience.

For example, I recently took on a marketing project that involved sending out a direct mail piece. I own an Internet-based company, I do everything online, typically. But I realize that I may need to do some direct mail at some point in the future. By taking on this project, I learned about the issues with the U.S. Postal Service, international mailing and made contact with local printers and marketing copywriters. The best part - I was paid to learn.

“The consulting company was a means to an end. It was to get cash flow, so that you could build a real software company.” - Joel Spolsky, cofounder, Fog Creek Software

“We were chosen under a Request for Proposal bid to build a student accounting system for a vocational school in the state of Minnesota, which helped us focus on what we were going to do…It was really a one-off. It also told us how we could underestimate a project, how we would manage a project, how we would manage engineers, how we would manage or own time. And we got paid for learning on the job.” - Ann Winblad, cofounder, Open Systems

Although it’s great to save as much as possible, there are times when you still need to spend. I’ll talk about those times tomorrow.

Front porch office photo by Daniel Morrison
Do it Yourself photo by colros

I have hired a lot of Web designers for various projects over the years. I am not a Web designer, nor a graphic designer, nor any kind of designer. But I know how to use eLance.

eLance is one of the best tools on the Internet for hiring contractors to do one-off tasks, such as creating a Web design, or a logo or content for a Web site. I love eLance. I use it all the time. In fact, I love eLance more than I love CustomInk, which is saying quite a bit.

eLance was founded in 1999, and when I started using the service - I posted my first project on 10/4/2002 - I was still an early user of the online marketplace. Since that time, millions of projects have been completed using eLance, and it now is used by many of the biggest companies around the world.

Here’s how eLance works if you are buying services. (If you are a freelancer and want to sign up to provide services via eLance, try the Find Work section of eLance for more information.)

Sign up for an account.
This process is easy and self-explanatory. You will need to have a credit card or a bank account from which your payments can be made. When you are picking your username, choose a name that can be associated with you and your business, as that name shows up everywhere when you are posting projects. For example, my username is PureIncubation, which is my company name, and works great.

Post your project.
After you have registered, you will be able to post projects to get bids. This involves filling out a form with the details of the project, including:

• Posting Title: Make sure to use the keyword for the project in the title - such as “One-page Web design of a technology site.” The providers are alerted to new projects based on keywords, so you want to include the type of project that you are hiring for (Web design) somewhere in the title.
• Category: For a Web design project, select “Website development”
• Subcategory: Select “Web Design”
• Work Description: Include a description of the project. Concentrate on making this as descriptive as possible without overwhelming the providers who are bidding. This will not be your last time to talk to the people you will consider hiring, but you need to be descriptive enough to interest them in the project and to get an accurate bid. I typically include a short description of what the project is (how many pages, what I want designed, if I have a logo or need one, if I know the general layout of the site, etc.), and I ask for a timeline and samples of relevant work. I also try to throw in something specific in the bid that the providers will need to respond to, just so that I can be sure they are reading the description of my project and aren’t just bidding indiscriminately. For example, I’ll write “Please include a link to another technology site that you have designed in your bid.”
• Work Type: For a Web design project, I pick “Fixed fee” because I do not want to go over the budget that I have set.
• Budget Range: This depends. If I know the budget, I sometimes pick a range from the list. But most often I select “prefer not to disclose” because I don’t want to influence the provider higher with their bid. Many times I have gotten a project completed at a lower cost than I anticipated because of the competitive nature of the eLance bidding system, and I don’t want to foil that process.
• Response Deadline: This depends on how much of a hurry you are in. Most of your bids will come in during the first three days, but the longer your bidding is open, the more bids you’ll get. You can always extend this deadline later if need-be, as well.
• Sealed Bidding: This allows you to be the only one to see the bids. Since this feature was instituted, I have found a much greater range in the bids that I receive because providers are independently bidding. I usually leave this checked but I’m honestly not sure if it makes a difference.
• Work Location: I always select “work can be done anywhere”
• Escrow: This just depends on how you want to pay. If you choose this option, you will use the eLance Escrow service and pay for everything up front - only releasing the funds when you approve various phases of the project. I personally don’t select this feature, but I am happy to use it if a provider requests this type of payment option.

Review the bids.
This part of the process is the key to making sure that you have a successful experience with eLance. You’ll likely receive quite a few bids (I typically get from 15-20 per project) and you need to review each bid from each provider to find the one that will be best for you. This is how I manage the process:

• Read the bids: By reading the bids that are made, you’ll be able to see if the eLancer is a good communicator, if they have answered your specific questions and if they posted any relevant information for your project. It is a red flag at this point if the provider either does not answer the questions that you posed in the description of the project or has spotty communication skills - you will want to proceed very carefully with hiring anyone who fits into either of those categories. Eliminate any providers that you don’t think will work.
• View all the portfolios: This is the most important part of the process. I look at every single portfolio, specifically, I am looking for sites the provider has designed in the past that are similar to the one that they will do for me. Sometimes providers are excellent at designing a Web site for an ecommerce company, for example, but terrible at designing a site for an elegant restaurant, or vice versa. I also look for overall style and if I “like” the designs that the provider has produced in the past. This is subjective, but design is subjective, and this site will represent you and your business, so it’s important to be picky. Eliminate any provider who doesn’t fit your requirements.
• Review the bid amounts: At this stage, I look at all the providers who are left and see how much money they bid. You may be able to narrow your shortlist down further.
• Look at history: eLance allows you to review the feedback and earnings history for all their eLance providers. You’ll quickly see that some providers have been using eLance for years and make gobs of money using the site, and others only occassionally dabble with projects that they find via the marketplace. What I am looking for at this point is any red flags - providers that score low or have consistantly bad comments. It is not unusual for a provider to occassionally have some negative feedback. If this happens, look to see if the provider had responded to that feedback, how they handled the complaint, and if the buyer has a history of dissatisfaction with providers. There are a lot of bad clients out there and a random bad comment should not elimate a provider from your selection process. But if you find any pattern of bad feedback, beware!
• Ask some questions: You are likely down to a shortlist of vendors, and at this point I always ask each provider on that list a question via the Private Message Board (PMB). I don’t always have a question, but I always come up with something to ask because at this point I’m trying to assess if the provider is quick to respond and if they have good communication skills. If a provider doesn’t respond, or doesn’t respond well, do not hire them even if you love their designs. It will not be worth it in the long run.

Select your provider.
Once you have made your choice, select the provider with the “choose bid” button. You’ll then go through a process of reviewing the business terms. Some providers require you to pay a percentage of the work upfront, this doesn’t bother me, but if you don’t want to work that way, you may want to choose the escrow option, or negotiate the terms.

Fill out the requirements document.
Once you have selected your provider, it is likely that they will ask you to fill out a requirements document to help direct the project. These are usually guides to the design process and help you and the provider figure out exactly what you want so that the designer can better fulfill your needs. Fill out these forms! Take as long on them as you need and be thorough- they will greatly help with getting you to the finished project that you want.

Communicate effectively.
At this point in the project, the only thing left is for you to communicate effectively throughout the process. Respond promptly to questions from the provider and ask them any questions that you have. Keep an open line of communication.

Pay and provide feedback.
After the project is complete, make sure to pay the providers promptly and give your feedback about their work on the project. When you are leaving comments remember that future providers will be reading what you say and will bid on projects that you post to a large degree based on what kind of a buyer you are. At the same time, make sure that you are providing accurate feedback to help other buyers in the future.

That’s it! If you go through all the steps, you will likely have a great, completed design. Of course, once you have the design you’ll need to have your Web developer implement it (or hire someone from eLance to do it for you) but that’s for another post.

Just a couple of other points to mention:

Negotiation - It is possible to negotiate with the providers on eLance. However, keep in mind that many of them are making the lowest bids possible already because the marketplace keeps prices down. But if you find a provider that you really want to use, and their fee is just slightly above what you are willing to spend, you may be able to ask them if they will drop their bid. Sometimes they will not - so be prepared for them to say no. Also, this typically works better if you are working on a second or third project with a provider that you have worked with in the past.

International outsourcing - If you have been wanting to jump into the international outsourcing market, this might be the best place to get your feet wet. Many of the eLance providers are not U.S.-based, and by using eLance you will have the opportunity to work with various people from around the world. Also remember that English is a second language for many of the people who use this service, so keep that in mind when you are conversing and negotiating. Err on the side of politeness.

If you have any problems - I have never had a single problem with an eLance provider, but I know that it happens. If you run into any issues, eLance offers assistance, including mediation and the ability to report any violations.

If you don’t find a provider - It is possible that you will go through the selection process and not find the provider that you are looking for. This has happened to me in the past. Never pick a vendor just for the sake of picking a vendor. Usually, this is a case of a project being posted incorrectly. You may need to change the category or subcategory under which the project is posted. Or you may need to change the description or scope of the project. Sometimes you may have an unrealistic budget that needs to be amended. Typically if you re-post the project again with some changes, you will find a provider. There is also the option with eLance to search through the providers that are part of the site and specifically invite select ones to bid on your project - this is another great way to get excellent providers bidding on your projects.

So if you need to be in the market for a new Web design, consider eLance as an option.

If you want to grow your business, I can’t think of a reason to put globalization off any longer. Pick a country, any country (other than the one in which you’re currently doing business), and take a step forward. There are ways to pick what country to start with, such as determining which countries already send a lot of visitors to your site, or finding a country that has a market in which your product has a lot of appeal. Then just start.

One of my clients is starting by re-writing all of the code for its primary application in Unicode, which has the “potential to cope with over one million unique characters.” Or you could start by examining how companies like Yahoo are managing their multilingual content. Or just subscribe to a blog that focuses on the day-to-day process of globalization. Or maybe your first step is simply trying to feel comfortable working on a project with someone in another country. My suggestion is to just try it. One site I’ve used in the past for outsourcing is eLance. The online service allows you to bid out projects of many types (including translation). All you have to do is register for an account (you’ll need an active credit card or bank account to qualify to use the service, although it’s free), then post your project. You’ll get bids from all over the world. This week, via eLance I’ve worked with contractors in Argentina, Russia and India (as well as my U.S.-based contractors – this isn’t a post about outsourcing all your work overseas!) This experience alone might open you up to the possibility of exploring other markets. Just start.

~Today’s view: http://www.flickr.com/photos/13799608@N08/1450092271/