Starting a business is all about making money. Yes, it’s also about passion, flexibility, and freedom, but ultimately a business needs to make money to be successful.
When I started in business, I wanted to save every penny. My turnover was low, my client base was small, and my risk felt high. Although it was scary at the time, I came to learn how true the saying is ‘you have to spend money to make money’. But how do you make sure that you’re making the right investments in your business? The key is to ensure that your spending is sensible, well researched, and has a high probability of increasing the business’s profitability.
With June seeing businesses and individuals alike preparing their tax returns and launching their budgets for the new financial year, it seems an apt time to reflect on some of my spending mistakes, and some of the missed opportunities in my business which would have been better invested in from day one. Here are my top saving and spending mistakes, and how you can learn from them.
Things I should have saved on:
When you’re new in business it’s easy to get suckered into the latest trends or business “must-haves”. This is especially the case with influencer culture on Instagram and TikTok – every day there’s a new time-saving product, phenomenal business subscription or crucial new software. But what should you really be spending money on? The top 3 things I wish I hadn’t spent as much money on early in business are:
- Annual/biannual subscriptions. I fell into the trap of ‘saving’ money through annual subscriptions. “$29.99 per month but I get it for $19.99 a month when I buy annually? Score!”. While this seemed great at the time, I ended up losing out by committing to apps and tools that I was not sure were right for my business. My advice is to pay the higher monthly price for a few months, and then lock in the long haul once you have confirmed it works for your unique situation. The difference is usually only an extra $20 or so but means you can switch it up way easier.
- Paid networking. Whilst it’s incredibly valuable to network and develops long term pipelines, it’s simply not worth forking out money on. Most new service-based business comes from referrals. I know this now…so I would say to my start-up self, be patient, you can’t buy clients! There are also countless ways to network for free or on the cheap – use social media, join a local or online business hub, or even put your services out there on freelancing sites. You’ll be surprised how many connections you can make without paying for it.
- iPad screen extender software. Yep, I thought this was genius. Turns out it quickly became tiresome and simply did not scale with my business. See my point below and just invest in multiple actual big screens. It won’t cost much more and your output will increase exponentially.
Things I should have invested in earlier:
While there are many things I should have saved money on, there are also a number of things I wish I had invested in earlier. Tried and tested tools for productivity and efficiency are the way to go – but be careful that they are tested, and aren’t just another fad. My top 5 investments are:
- A project management tool with bells and whistles. In a service-based business, you are managing a lot of lists, tasks and priorities. It may seem like a good idea to go with a free forever plan…but if the business is the success you plan it to be, it is so much more work retrospectively setting up the paid features. Go with a paid plan that works for you and set up your processes as you go – you’ll thank me later!
- Proper accounting software. I started with a colour-coded spreadsheet which makes me shudder now. But yet again, this simply didn’t scale up when my client base did. In 2022 it really is all about XERO, credit card feeds and limited touch bookkeeping. Keep it simple, but do it right from the get-go.
- Multiple monitors. Efficiency is not all about apps, tools and automation. Sometimes simply having enough screen space is all you need to get the job done. I started out with one monitor and an iPad. I now have three computer monitors and am tempted to get a fourth. Every time I add a screen, I supercharge my output – a win for me and my clients. I’m not saying get four screens at the start of your business but invest in at least two.
- Insurance. Whilst I had insurance from day one (because I love to follow the rules and my husband is an Engineer – no risk in this household!) I probably should have put higher coverage into place earlier. Thankfully I have never had a reason to need it, but it is one of those ‘annoying’ expenses I review often. Be sure to check out your options and consider going up a tier to cover all your bases.
- Automation. Even when we first started out, we built integrations for many of our clients… yet I didn’t integrate automation into Empire from its inception. Let me tell you, it is now the best $200 a year I spend on my business. And, I get a real kick out of every new automation I implement that rakes back more time in my day. Had I done it sooner, I would have had much more time and less stress in those early days.
There is no doubt that it has been, and still is, a weird old time in the world. But when things are uncertain, NOT spending is not the answer. It is counterproductive. You just need to be strategic and your ROI will come out stronger for it.
