Investing in your startup is critical to your success, but which expenses can you do without? Not every business investment is worth the cost. Learn more.
Approximately 50% of small businesses fail within the first five years.
That’s only one of many factors that make the thought of becoming an entrepreneur so terrifying for most people.
If you choose to go down difficult (but yet highly rewarding) path, you need to have a financial plan.
Many people make the mistake of spending money on expenses they could do without. But, it doesn’t have to be difficult to avoid dropping unnecessary cash.
Not sure where to start with your business investment? Don’t worry, we’ve got you covered.
Let’s take a look at the expenses that are essential to building a startup.
First, let’s kick things off with discussing what you absolutely need to have a budget for if you want to run a successful business.
This is one of the most valuable services you will ever purchase as a business owner. This is especially true if you operate within an industry where legality can venture into a bit of a gray area, such as cannabis.
Even if your company is as basic as they come, you’ll need to hire someone to help you with legal paperwork, potential liability issues, and solid legal advice in general.
While it may feel disheartening to have to spend money on a legal professional so soon, it could save you thousands (and potentially millions) of dollars in the future.
Unless you get lucky and word of your business spreads like wildfire, you’re going to have to take marketing and branding seriously as a business investment.
While this doesn’t mean you need to spend thousands of dollars running a campaign as soon as you’re ready to start to grow your business, you should still allocate funding for the basics.
These include social media advertising, market research, and proper SEO strategies.
By putting a little money down toward well-researched tactics, you’ll be surprised what you can accomplish.
If your business requires a significant amount of technology (and most do), you’re going to need someone to build your website and maintain your servers.
While you could accomplish these tasks on your own, the money you could be making with that time spent outweighs the money you save by doing it yourself.
Thus, you should budget for proper technical support (whatever it may entail) for your business to ensure that things stay running smoothly.
If you’ve never done business taxes on your own before, you’re in for an unpleasant surprise.
As you may expect, filing taxes for a small business can be far more convoluted than doing taxes for yourself.
As previously mentioned, the money you save simply isn’t worth the time you spend doing your company’s taxes by yourself, so be prepared to hire a professional.
Budgeting for an account’s salary may be off-putting to most entrepreneurs, but it’s a necessary cost.
When you have a reliable accountant budgeting for your company (and making sure you stick to it), you’ll have more money to work with as time goes on, which you can reinvest into your business.
Finances are the lifeblood of any business, so make sure they’re in good hands!
Now, let’s explore common expenses that you don’t actually need to waste time or money on.
Many entrepreneurs have a vision of being at the helm of a strong team that dominates their chosen industry. They’ve handpicked each of their employees, and each individual both excels in some areas and fills in where others lack.
But, this simply isn’t a realistic scenario for a startup. Keeping employees is a lot of cash, and if your business isn’t bringing in an amount that is exponentially larger than what you’re paying your workers, you’re wasting valuable money.
Instead, outsource areas where you need some extra help and save the hiring for when your company can afford it.
This is another one of those unrealistic expectations entrepreneurs have when first starting their company.
But, this additional overhead cost can often mean the difference between sinking and swimming.
While it would be nice to have a dedicated space to meet with potential clients, you should only rent out an office space when you actually need it.
Until then, wherever you base your company out of (even if it’s your own home) will have to do.
Sometimes, entrepreneurs run into equipment they don’t necessarily have a use for at that moment. If you find yourself in need of business storage until you get an office of your own, you can read more herefor options.
Creating a social media profile and having only a handful of followers can feel embarrassing. You may feel like you’re the only one who reads your posts, or that nobody will take your brand seriously because of the lack of engagement.
But, it’s actually worse to flood your followers with fake followers and comments.
Most people in your target audience will see right through this (especially by looking at your engagement to follower ratio) and will assume your company always engages in dubious practices like this.
Unless you have something to say or sell that will pay for your trip (and then some), you don’t need to go anywhere for your company.
Telephone and Internet communication will work just fine until you’re ready to present something to people who could put something in your wallet.
But it doesn’t have to be. With the above information in mind, you’ll make sure that every business investment you make is the right one.
Want to learn more about what you can do to help your startup? Check out our blog!