When you first started your company, chances are you didn’t have any money. Maybe you were scraping by on bank loans and working from your bedroom, pulling favours from friends and drinking more coffee than you thought possible. At this point, I’ll admit, you were right to be scrimping and saving however you could.
But now you’re turning a profit, renting office space, hiring employees and doing everything you can to grow your startup into an industry-leading business. It’s at this point where too much scrimping and saving may be more harmful than beneficial.
I’m not talking endless parties and BMWs all round, but there are some areas where you’ll need to spend money to grow a successful business. So where should you be spending?
Once you start building your team, you’re going to need somewhere to put them.
“Get it right and you have happy and productive staff; get it wrong and it will slow people down, cause aggravation and waste money.” – Paul Kelly, Head of Marketing for workplace consultants Morgan Lovell
Just think how much time you’ll be spending in your office. The right space can inspire creativity, boost morale and won’t leave your team feeling stifled and running for the door at 5pm sharp.
Don’t forget, your office space should also be a reflection of your brand, including your values and your mission statement. If your brand is simple and clean, a cluttered office is going to confuse your staff and even your clients.
Don’t always do it yourself
Doing everything yourself is not going to save you time or money. In fact, if you try to do everything, you probably won’t do anything well.
So at some point, you’re probably going to have to outsource something (e.g. hiring someone to build your website or take care of your marketing or accounts), at least until you’re in a position to bring these roles in-house (and even then, you might find outsourcing works better for you).
It might seem more expensive than doing it yourself, but it’s going to be more cost effective in the long run, especially if you choose your subcontractors wisely.
Your wonderful team
If you want the best and brightest among your team, it’s going to cost money to get them on board and more money to keep them there.
Never scrimp when it comes to keeping your team happy and motivated. That’s not to say you need to bring in Google-style sleep pods or an on-site company pub like MillerCoors (yes, really), but you need to show your team you appreciate them, or they’re going to leave you and high staff turnover is going to make it difficult to adapt and grow your company.
Here’s a few ways how spending money on your team can keep them motivated:
- Pay them fairly
- Offer a decent benefits package (we provide lunch for our team as well as standard things like health insurance)
- Take them for regular days/nights out
- Offer as many chances for training and progression as you can
The right tools for the job
It might be painful to fork out for the right hardware and software but always consider what they’ll save you in the long term before you point blank refuse to buy them.
A monthly subscription to online HR software might save your admin team time to get other important tasks done. A subscription to financial software like FreeAgent is probably going to be more cost effective than hassling your accountant every time you need to check your finances (we use FreeAgent for VAT returns so we don’t have to pay an accountant to do them).
Listen to your team when they request tools to help them with their work. You don’t always have to say yes but you might be surprised at how many tools there are that can save you time and money you could be using elsewhere.
Keeping your customers happy
The customer is always right. Most of the time. Yes, even if they don’t agree with you. If your customers or clients are unhappy, they’re going to go elsewhere and you’re going to get a bad reputation.
You don’t want to leave your customers (or prospective customers) hanging, even if it comes at a cost.
If you’re getting more support requests than you can handle, why not try using help desk software like Help Scout? If clients are taking up all your time, consider hiring project managers who can give your clients the time and attention they deserve.
But don’t go spending-mad!
Not spending enough in the right places can certainly hinder the growth of your startup but don’t forget that running out of capital is, unsurprisingly, one of the most common reasons startups fail (up there with not knowing your market, poor management and badly thought-out business plans).
Saying “no” to spending can be tempting, especially for an early-years startup. With so much advice available on where to save money, it can be easy to forget that, sometimes, you have to spend as well.
However, overspending is guaranteed to bring your business down so make sure you find the right balance to suit your company. By all means, save where you can, but always remember to assess how splashing out now could be more cost-effective in the long run.
How does your company decide where to spend and where to save?