What you do with your money in the beginning stages of a business is critical to its success long term. Many new business owners will choose to skip over some costs as they may seem too expensive or not worth their time. However, there are several areas a new business should invest in from the start.
According to Small Business Trends, only 2 in 5 startups are profitable. If you want your business to defy the odds it’s important to invest in the right tools. As a new business owner, it can be tricky to figure out where to correctly allocate your funds. Between marketing, operations, finance, and more, there are several key areas to spend money when starting a business.
To help, we have outlined the top things all new businesses should be spending money on.
#1. Market Research
In order to understand whether or not your product or service will be successful, you need to conduct market research to understand whether customers will be willing to buy it. In fact, the number one reason startups fail is due to misreading market demand. So, make sure market research is one of the first things you spend money on before launching your brand.
#2. Tools & Technology
Having the right equipment is a necessity for all businesses. Whether you work in online retailing or construction, there are tools specific to your industry that will definitely give you a competitive edge. However, don’t be drawn in to buy things just because they’re new & shiny. Do your due diligence to ensure the tools and tech you are buying are worth the cost and will provide a good return on investment.
Everyone needs help and the biggest part of scaling a business is hiring people around you who can help make that happen. The right people have the power to lead your business to success. Understand what skills you may be lacking in and hire people who can fill the gaps.
With the internet and social media, it is important now more than ever to have a brand that stands out and means something. Good branding drives consumer behavior and helps customers make a choice. Get together with your team and figure out what you want your brand to symbolize. This will help establish trust with customers and create a brand that stands the test of time. For more tips on how to create a well-established brand, check out our guide to establishing lasting brand identity.
Now that you have a brand to represent your product or service, it’s time to market it! One of the many benefits of marketing is that it does not cost a fortune compared to other expenses on your list. Consider investing in a website and social media presence in order to build awareness around your new brand.
#6. Customer Service
Seeing as 49% of American consumers switched companies last year due to bad customer service, it’s no surprise that spending on quality customer service is essential for new businesses. Your customer service team is the face of your company, and are an essential part of your overall brand image to your customers.
#7. CFO or Accountant
A CFO or accountant is an investment that more than pays for itself. Having a professional who understands cash can help keep your companies limited finances in check. A CFO or accountant will be able to examine your expenses and revenue to determine the best path for your company to take, and can even help ensure you are taking all the correct steps during tax season.
Insurance is a reality that is necessary to protect your business in case of an emergency. Businesses operating in everything from healthcare to construction need proper insurance to protect your company from risk or liability. Whether you are paying for health, flood, or theft insurance, having coverage in case of a disaster is essential for small businesses who cannot survive major hardships without the help of insurance.
#9. Legal Advice
It’s important to protect your business against any costly lawsuits. A legal advisor will take that boring work off your plate and will make sure your business is protected. Without this precaution, you risk losing your business as a result of legal action taken against you.
Proper money management can be the difference between a successful startup and a failed business, so the stakes are extremely high to get it right. Your best bet is prioritizing key areas that will either help raise awareness for your business or keep your business safe. In terms of raising awareness, this includes things such as market research, customer service, marketing, and branding.
By understanding what investments will make the most impact, business owners can learn to prioritize their spending. For more tips on where to spend your money when starting a new business, check out the infographic from JW Surety Bonds below.
About the Author!
Sierra Skelly is a creative writer and content marketer from San Diego, Ca. She writes for clients in a variety of industries ranging from personal finance to travel.