Starting a new business venture is always a busy and exciting time. There is nothing quite like being your own boss (especially if you’ve had a horrible one), running the roost, and being in charge of your own schedule. However, as with all start-ups, what you spend your money on is vitally important. There are essential costs that all businesses need to cover so that you can get things up and running, but it can be easy to get carried away early on and spend unnecessary money in the early stages of a business. There’s nothing quite like a shiny new office or branded merchandising, but having these expenses can be a quick-fire way of building up company debt. So, what should you and shouldn’t you be spending your money on early on once you start?
Growing the workforce too large
Hiring a new team should be a fun, but testing experience. Finding the right people to help you grow your business and take it forward will always be a challenge, but if you get it right you could have the same staff for years. The temptation comes in hiring too many people too soon, when you first start out you may see a large intake of work, likewise, if you rely on seasonal work, you could have fluxes. When these fluxes slow down though, you could find yourself with too many staff on large salaries.
Taking on subcontracted or part-time staff, may not be as glamorous as a long-term large workforce, but with the right amount of staff, doing the right amount of work, you can save plenty of cash in the long run.
A glamorous new office
If the coronavirus pandemic has taught us anything about the way we work, it’s that people can work remotely almost as effectively as they can in an office. Although having a strong morale is vitally important and building a good work ethic in an office is crucial, when you’re looking to cut back having some staff work remotely, or part-time remotely can be a big saver on the purse strings.
A brand new, shiny, glamorous office can be brilliant when it comes to showing off on social media, or meeting with prospective clients, however, it can be an extremely costly investment and you have to consider, is it worth the investment?
There are ways of justifying a large expensive office. If you’re growing quickly and need the space for staff or equipment and while there’s no harm in planning ahead, upscaling a business before you need to will undoubtedly lead to you spending more money than you need to and deplete your cash reserves.
Too big too soon on marketing and expenses
Marketing is a huge part of any business. Getting the right message to the right target audience cannot be underappreciated and is crucial especially early doors. But, as important as marketing it, going over the top can be detrimental, not only to your bank balance, but it can also put people off. Getting on potential customers nerves and putting them off is the last thing you want to do.
Overindulgence into your own message works exactly the same way, having your own branded equipment is important but is essential to the business within the first few months? Creating the right kind of promotional material is essential and every business should have a clearly defined message they want to get across. It’s a case of promoting through the right channels in the right way not just throwing money at things.
The same can be said for your business expenses. Whilst taking out clients and building strong relationships is key, there’s no need to over the top and amass huge amounts of money on fancy meals and drinks. The same could be said about a company car, you need to ask yourself is it really 100% necessary?
Any new business venture is both exciting yet scary. You can have huge plans, and brilliant ideas, but without the right planning and strategy, it simply won’t work. Make sure you do the right kind of research on all aspects of the business, marketing, staff, and your business premises. Ask yourself if you need to spend all the money you do and is acceptable? It’s also key to keep in mind that depending on your business structure, personal and business debts can intertwine, which means that pumping your money into the business can affect your personal finances.