As a new company, you’ll only have limited funds – so where are the best areas to spend your start-up cash?
If you’ve been lucky enough to secure start-up funds for your new business – whether as a grant, loan or through an investor – you’ll need to spend this money wisely.
The second biggest reason for businesses failing in their first year is that they’ve run out of money, according to CB Insights.
Even with a generous fund, there are dozens of costs to consider when starting a new small business.
So knowing where to spend the money is an art in itself. Here are 3 areas you could spend your money on…
Getting the right people
A good idea can make or break a business but without the people to implement it, your business will go nowhere. People are the foundation on which to build everything else.
Hiring good staff can help you save money down the line, while get the wrong people and you could soon see that fund start to dry up before your first sales are even made.
Good accountants and tax professionals should be some of your first hires – they can start to save you money from the off. Same goes for lawyers as they can help you avoid costly mistakes.
But this doesn’t mean you should be paying yourself a huge salary. Any investor will want to see results, not the founder turning up to work in a brand new suit.
Finding your market
It might seem like you’re putting the cart before the horse by investing in marketing so early on, but the CB Insights poll found a lack of market for products was the number 1 reason for start-ups failing with 42% of new business blaming this for going under in their first year.
Your money should be spent first on creating a business plan and doing market research to show exactly where your product will fit into the current market.
Next, create a marketing budget – if you don’t tell people about it they’re never going to buy it. Launching with a good marketing campaign can set your business on the right path. But make sure you can show return on investment for such expenditures. Poorly conceived marketing material can also damage your business.
Sadly, some of these are not avoidable. While you can work from home with a skeleton staff, if you skimp on broadband connections or low quality computers you could spend half your time waiting around for problems to be resolved or sat on hold to a helpline instead of using your valuable time growing your business.
But this doesn’t mean going out and blowing it all on fancy offices, huge printers and branded stationary. If you do need an office address, think about getting a virtual one.
Posted by The Secret Businessman