As a business owner, it can be difficult to determine where to allocate your limited resources. There are some costs that can be written off as non-essential, but there are seemingly many more that are required to start a new business.
Seeing as 90% of startups fail, it’s clear that the strategic allocation of spending is a key step to get ahead of the game.
Where to spend money when starting your business
If you’re trying to determine the essential categories to prioritize spending in, look no further. Here are the top areas to spend money when starting your new business.
1. Marketing and branding
You can have a fantastic business model, but if no one knows about it, your business is not going to succeed—this is where marketing and branding come in.
Marketing helps drive your sales for a relatively low cost and high return on investment (ROI). When starting a new business, it’s important to focus heavily on marketing spend to raise brand awareness.
Additionally, with the rise of the internet and social media, having a strong branding strategy and digital presence is key for the 97% of people who learn about a local company predominantly through the internet.
All businesses should be prioritizing legal advice as a necessary business expense. Be sure to have a legal professional set up contingency documents like fidelity bonds and review your business contracts for red flags.
Without a legal advisor, your business is vulnerable to having legal actions like lawsuits filed against you, which could result in the loss of your business.
3. Market research
Without market research, you aren’t truly able to understand any gaps in the market and make strategic decisions about the future of your business. Market research helps you identify your target market so you can reach them in the most effective way possible.
Although market research is expensive, it is a necessary step, seeing as misreading market demand is the #1 reason why startups fail.
Additionally, there is a plethora of secondary market research available at a much more reasonable cost if you’re tight on cash.
One of the most important ways to spend your money is on human capital—on hiring the best employees for the job. The people who work for your company are just as important as the products or services you provide, and having a strong, cohesive team is key for your startup to succeed.
When hiring your team, it’s essential to also have the long-term health of your company in mind.
- Can you see this person growing with your company?
- Does this candidate fill a gap in your current business needs?
These are all considerations that should be undertaken when searching for the perfect candidate.
5. Finance or accounting
The last way to spend your money is on people who know money. Hiring a chief financial officer (CFO) or accountant will keep your companies finances in check and help you set up a strong future plan for your cash flows.
Having a professional who understands financial economics is an investment that will more than pay for itself since they both manage day-to-day finances and help craft a future financial plan to make your company flourish.
Where to spend your money is important
When starting a new business, deciding where to put your money is one of the most important factors to determine your success. Starting with strong market research is a key first step to building your business, and having a strong team around you will ensure your business continues to succeed.
For a complete guide to where to spend your money when you start a new business, please take a look at the infographic below.
This infographic was created by JW Surety Bonds.