The strength of stipends

Filed in archive Bootstrapper Tips on January 25, 2010

It's easy to get distracted and dragged off track with all the minutiae and details that go along with starting up a business, even if you are not someone who is naturally inclined toward micro-management. There are just a lot of complications that come up, a lot of unexpected costs, and a lot of plans that don't pay off quite the way you hope and it's easy to get sucked into the loop of trying to manage all that cost and bother.

You can't entirely avoid some of the afflictions, but you can seek to minimize the impact and make your costs more predictable by making a greater use of stipends in your business than you might normally be comfortable with. This comes primarily out of experiences in dealing with employees and personal technology requirements, as discussed here; but it can apply equally to any number of other detail-oriented aspects of your business.

With technology, there has been an expectation created that the company will provide devices necessary to do the job, and that company or contracted IT resources will be used to support that technology. This often leads to a lot of disappointment among the staff, who get stuck with devices they don't necessarily like or want, and a lot of unexpected expenses, as the support costs go through the roof as people use and abuse stuff they don't like in the first place.

Both these problems can be addressed by the use of employee stipends to purchase and support items they will use in the course of business. With a properly structured business, you don't have to care what phone your employee uses, any more than you can what color Post Its they use. If that's the case, why involve yourself in the purchasing decision? Figure out what your reasonable annual expense is for those items, fork it over to the employees, and let them figure out the details themselves!

It's scary, but it provides extremely stable budgeting, and reduces a lot of pointless meetings and conversations that revolve around topics that really have nothing at all important to do with the focus of your business. Successful startups stay focused; don't sink yours with endless meetings about managing office supply expenses.