If you’ve been doing your research on what makes a business successful, you will come across all kinds of tips that tell you to spend money here, there, and everywhere. Money unlocks many doors, but you have a finite amount of it. So, let’s cut through all the budgeting stress and address how to prioritize your budget. We’re going to use a few examples, but it’s the reasoning we use that is going to help you decide when to and when not to spend that oh-so-valuable cash.
DO: Market Understanding
Every business is going to have one relationship, in particular, that is going to dominate most decisions that they make. We’re talking about the relationship to the market. Not just the customers out there, but the position of the business in relation to competitors. There’s no doubt that you can do a lot of free fact-finding, like launching questionnaires and looking at opponent marketing. But it’s worth spending a bit of money on market research at the start so you can have access to things like paid survey services that can get you answers a lot quicker. The entire future of the business depends on how well you understand the market, so you shouldn’t feel guilty about spending a little money on it.
DO: Precise production
If you are creating goods to sell to the market, then by no means should you skimp on any part of the production process. You might think that you’re saving money, to begin with. However, in industries like medical machining, opting for lower quality equipment results in products that simply cannot be used by the market. It means much larger long-term costs due to problems like manufacturing downtime, faulty goods, and the cost of additional maintenance and equipment repairs and replacements. Manufacturing isn’t cheap, we understand this. But it shouldn’t be. At the end of the day, delivering a quality product is what’s going to keep the business sustainable, not scrimping every penny you can from the production line.
DO: Employee development
Any business that doesn’t try to develop its employees is going to find itself having an increasingly harder time keeping them. Failing to retain an employee means having to replace them. This means losing production while they’re not there. It also means having to pay for the recruitment process and any training that needs to be done on the new hire. Per employee, this can cost upwards of $40k. Immediately, it becomes clear that investing in a bit of development and reducing their margins of error. is cheaper. It’s also better for the future of the company. A more versatile skill set means you might not have to expand the number of employees to expand the variety of processes that the business is able to take on.
Marketing your business is essential. You need a brand image and some sort of relationship to your consumer base. That does not, however, that you have to constantly spend to do it. It’s a good idea to spend a little on honing your visual brand and creating a truly professional website. However, you don’t have to pay for people to do search engine optimization, content production, and social media marketing for you. It’s all too easy to take that all on yourself. It simply requires a bit of learning that is very available and very free with the amount of helpful content on the internet. If you want to invest in marketing, make sure you’re investing in methods you can’t do yourself. For instance, paying for video production or influencer marketing on someone else’s blog.
NO: Lots of software
The exact same logic applies to the software that your business uses. There’s no doubt that there are going to be some processes for which you would much rather rely on paid software. CAD software if you’re in the business of producing goods or you work in architecture, for instance. However, for a lot of administrative and organizational tasks, it’s a lot easier to simply hunt down the free ones that exist. Sometimes they might not update as often and they might not have the sleek user interface. But they take the same amount of work to get the same results. There’s even free automating software which means that free software might not only save you money but help you make it by making the business more productive.
NO: Your dream office
Having a workplace that fits all the needs of those working inside it and your responsibilities is very important. Investing in ergonomic chairs, effective HVAC, and proper lighting for desks is a good idea. Going above and beyond by investing in the very best office art and most stylish furniture? That is by no means a vital need of the business. When it comes to the workplace, focus on function first and foremost. Only look at the form if you get a sudden windfall and you feel like sprucing the place up a bit. In fact, we would recommend spending less on office space by using remote working agreements as often as you can, too.
NO: Lots of materials
When you’re creating goods and products, you might think that you’re being smart by going for bulk orders. There’s no doubt that you might get quite the discount at first. But have you considered how good the deal will be when you’re still holding onto some of those resources in the far future? You might be costing yourself space that could very well go to other resources that you need. You will also be increasing the cost of inventory. Most goods need some kind of air quality control to stay in shape, after all. Whether you’re dehumidifying, heating or cooling, that’s adding to your long-term bill. Order materials based on demand and nothing else.
The logic above will help you make the right decision no matter what potential expenses float your way in the future. Most importantly, make sure you’re not spending a fortune when you could get the same result from just doing a little work instead.