When you’re running a small business — maybe so small that it’s just you or with 50 of your closest employees — it can be tempting to pinch pennies as much as possible. You want to make sure that you’re bringing in as much money as possible and you’re not spending it on unnecessary expenses.
But there is plenty of truth in the claim that you have to spend money to make money. While just spending your business’ cash on anything that comes along probably won’t get you where you want to go, there are expenses that have a significant return on investment (or ROI) — places where you can spend money and get a lot more back for your efforts. Here are a few pointers on where spending your money can be very helpful (or profitable).
- Highly targeted marketing: The odds are good that you have a very clear idea of what type of client you want to work with. Take that ideal one step further and look at exactly where you’re likely to be able to connect with those clients. Depending on your industry, there may be must-attend events or particular websites with great advertising opportunities. Invest the time and money into your marketing strategy — if you do it right, you’ll get the most value for your money out of any business expense you might have.
- Hire out the things you can’t do quickly or well: There’s probably one skill set that you’re particularly selling to your clients at this point (even if you’re actually marketing a product). The more time you can split between that skill set and your marketing efforts, the more money you likely make. That means that everything else tends to fall by the side. Tasks like data entry are a necessary part of running a business — but no one ever said that you can’t outsource them to someone who charges less per hour or than you can make if you spend the time you free up on paying work.
- The right equipment for your work: At first, you may have to bootstrap your way through your work. You may not be able to afford top of the line equipment the first day you open your doors. But once you’ve got money coming in, it’s a good move to start investing in better equipment for your business. If you’re waiting thirty minutes just for your computer to warm up in the morning, you’re losing money. The same goes for doing something by hand that you know you could do a lot faster with the right tools or software.
For many small business owners, spending any money at all can feel wrong. You depend on your business for your livelihood and anything you invest in your company may be taking food out of your mouth. It always feels like the right move is to sock more away into savings. But if you want to grow your business and make more money in the long term, you need to spend at least some money now. Balance your need for more security with your long-term goals for your business.
Thursday Bram has been freelancing for more than eight years — the last four full-time. She’s the co-founder of EnhancedFreelance.com, a membership site for freelancers ready to up their game.