There are two things to really consider; what to spend money on and what not to spend money on.
There shouldn't really be an in-between, don't engage in something and go tight on it as you just won't get what you need.
For us, those two columns look a little like this:
WHAT TO SPEND MONEY ON:
Number one on our list for good reason.
Knowing how and where your business is going is CRUCIAL. You can have a bank account filled with endless money but unless you go through a thorough process of planning it's pointless.
What does this process look like? We aren't talking about printing off a business plan template from a government website, we are talking about investing your time and energy properly from the beginning.
We understand, it can be a little like handing a child a Christmas present and telling them they can't open it until next week. You've got your business idea and you are ready to go, BUT, unless you really pull back on the reigns a little and get your ducks in a row, you're setting yourself up for disappointment.
How much money are we talking?
As with everything we talk about here, it needs to sit within a reachable budget but also balance the fine line and valuing the benefits.
Cue our shameless pitch here............
NO, really, our Learn Lab Startup Success online course is a GREAT investment. Or any other course really that resonates with you, just make sure it has substance and gives you actual answers.
Upskilling yourself and investing in understanding exactly what is involved in startup stage is priceless. It won't only save you wasting dollars but a LOT of time. You can spend months and even years trying to join the dots on processes and seek out answers to things that we cover in our 8 week course. Find out more about that here
This is your first impression, your very first shot to be remembered. Your brand is so much more than a logo or an image. It's the voice and tone, it's the personality and it's how you stand out. Spending money on a proper branding package can make a huge difference in capturing all of these things. In saying that, don't be fooled into spending a fortune. It's hard to put a specific number on it as some will need more than others but we recommend you find someone that understands your intentions and listens to your idea properly. Up to $500 should get you all you need.3. Accounting/Operations:
Here is where you will spend some money but realistically, save yourself money in the long run. Starting off with the correct structure will save you the pain of untangling things later and in some cases, land a big tax bill when you aren't expecting it. Where you do want to be careful is that you aren't paying large corporate prices for small business advice. These days, there are plenty of small business specialists who won't charge you the overheads.4. Legal Advice:
Similar to your accounting and operations, legal advice is something you DO NOT want to skimp on. Online businesses need to be covered for things as little as the advice you give in a blog post (just like this one). Terms & Conditions, Privacy Statements and any licences or conditions to purchases you may have.
Similar to your accounting advice, this doesn't need to cost the world. You just need to find the right one for small business.5. Market Research:
DO NOT spend money on developing a product or even really your service offering without considering your market. Products particularly can require you to order large quantities or commit to contracts. Without testing your market properly, this can have you tied into something that in the long run doesn't work. Make sure you research your market properly and the need for a product or service that you are offering.
Ahem, Learn Lab course covers all of this. Just saying.6. Technical Support:
No matter how big or how small the offering, it pays to get some of the systems basics set up properly. The days of needing a degree in IT to set up an email account are gone (well, nearly). GSuite through Google offers affordable packages to enable you to have a professional email account and with free tools such as Google Drive you can start off on the right foot. This starts from as little as $8 per month.
WHAT NOT TO SPEND MONEY ON:
1. Expensive subscriptions:
There is a mountain of paid 'extensions' you can subscribe for to help your business from social media scheduling tools, email marketing templates to all sorts of bots! Our advice is to only sign up to those completely necessary at the start. Things like GSuite should be invested in early but hold off on signing up to long contracts or monthly costs for 'nice to have' tools until you have sounded out what is a priority for you.
2. Fancy office or premises:
Now, in some instances, we appreciate this may be a necessity if you are physically opening a store or need warehousing but the temptation to set up a fancy office and commit to long contracts is one that needs to be managed. If COVD has shown us anything it's that you really can work from anywhere and those dollars are far better spent on acquiring customers.
Now, don't get me wrong, having staff on board is a great thing if they are 100% necessary but in the early stages, it may not be necessary. Wages will be one of your greatest expenses and at startup stage, that can bleed a lot of money. VA's and outsourcing the things you really need to on a part-time basis can be a great alternative.
4. MOQ's and excess product:
MOQ's???? Minimum order quantities.
When you are developing a product you can get tied into an MOQ either through a supplier's terms or the simple fact that price-wise it works out much more affordable in larger quantities.
This is not to say you should never make use of this but when you are just starting out it is much more important to explore the actual product and test it properly before committing to huge quantities.
5. Buying followers or email lists:
Quality not quantity, quality not quantity, repeat it a thousand times. Yes, in the early days of Instagram and Facebook it was more focused on the volume of your following but definitely isn't anymore!
The same goes for emails. Back in the day, we used to have a saying "throw enough shit and something will stick".
The problem with that now is that there is so much shit being flung around that people are OVER IT! So, focus, we mean really focus on that target audience and attracting those that are relevant to your business.
6. Poorly targeted campaigns:
Social media has opened doors that traditional and print media couldn't even dream of and advertising through social portals is much more affordable. However, regardless of how much cheaper it is, money can disappear very quickly when you are speaking to people who aren't listening. Be sure your dollar is very targeted. Again, this comes down to knowing from the very beginning just exactly who your true audience is.
Whether you cover off every one of the things on the list of spending or not one thing you absolutely MUST do is............MEASURE YOUR COSTS!
It's imperative that money out equals money back in. Now, that may not happen immediately as some things like targeted advertising can take a little time to convert however it's important you keep track of what is working and what is not.
Be sure to agree on costs for things like designers, developers and accounting or legal advice before you engage. You don't want to get stung later for extra hours you didn't brief in properly from the beginning.