We all know the old saying 'you need money to make money'. A very accurate statement. Investors, bank loans, and business revenue are all the monetary streams that you use to help promote your business.
Nobody can start a business without an investment of money. Even if it just time, time is your money too. How to spend that money to grow your business is what you need to consider strongly. In addition to how much you should spend?
Start-ups often spend a lot of money in the infancy stage. Investing in courses, lease hold improvements, deposits, technology, products and so much more. As the business grows and eventually becomes more established, owners need to invest in spending to stay relevant. For example; advertising, updates in software, branding, and new hires with new skills.
Your personal fiscal opinion will guide your business in every stage. So which approach is best for your business? Spending liberally, or spending conservatively?
Spending Liberally
Even the best entrepreneurs know (Mark Cuban says this all the time) that in the early stage of developing and growing a business you need to nurture it and be present. This stage is where you save as much as you can and not spend too much right out of the gate.
As you start to see revenue trickle in, and believe strongly in investments (like software that can save you money down the road, or marketing strategies that will result in new customers) then spending liberally is not only a good idea, I would encourage it.
One caveat, you should have access to the money you need, and still have some money left for emergencies. I would caution that you do not need to spend a lot on new initiatives. There are ways of spending freely without having to break the bank.
Spending Conservatively
There is always room for spending conservatively. You might feel the need to update an office, or invest in a new state of the art technology, however, this is where you weigh out the benefits carefully. As mentioned above, I encourage investing in your business, only some things are arguably true investments. Some growth strategies can also be put off until the time is right to invest. In other words a Must-haves list warrants liberal spending, vs. a nice-to-have list warrants conservative spending.
For more clarity, If an inventory software will save you money down the road, but it won't generate revenue right now, you can still invest, but work out a monthly plan to free up your liquid cash for other growth initiatives. If you do not have enough money to invest in it, then be fiscally conservative and invest in the marketing to drive more revenue and use that revenue down the road to purchase the software.
Managing money in any business takes time and experience. Work through your options and consider everything from interest rates, to payment plans before making big decisions.
Reach out if you want to discuss your unique situation and talk more about your options.
