When you are starting up a business, it is easy to go overboard on your spending. Setting up any business – even a solo business run from your back room – requires an initial investment but keeping the costs down isn’t your only concern. You must also make sure that every tiny expenditure is going to benefit your business down the line.
So how do you know what is worth the spend or where to cut back? Well, there are 3 questions that might just help you there.
Is it Good Value for Money?
You’ve got your finances in order and now you can start spending. The first question you should ask before you spend any money, never mind your business investment, is whether you are getting good value for money. When you look at a pair of shoes in a store, when you are comparing cucumbers in the market and even when you are deciding whether to get a taxi or take a bus.
Value for money isn’t always about finding the cheapest option. In fact, spending a little bit more is often the best way to get true value for money. A pair of leather shoes might be a bit more expensive but they will certainly last a long time.
The same principles apply to services. Business IT consulting is a common service but you might do better by spending a little more so that you can 24/7 access to a helpline than spending less and struggling when your website goes down overnight. Better services might cost more but the investment works out because you don’t want to risk being left in the lurch.
Is There Potential for Growth?
Another good question in business, finding out where there is potential for growth is important because you need to see where you are going and how an investment fits with your idea for the future. For example, a website has ample potential for growth as you can add to it consistently and develop it over the years.
Every business should have a growth strategy that outlines where you want to go with your business, how you want to develop and which strengths you want to invest in. This strategy should inform everything from the size of the office you lease to the new staff you hire and the skills you develop. Even on your first day, you should be thinking about growth.
Can You Find a Smarter Solution?
Settling for the first solution/ product/ idea is never a good plan for 2 reasons: firstly you have nothing to compare it to so you can’t figure out whether it is the best solution and secondly because until you have explored alternatives, you can’t be certain that this is the best value for money. Smart solutions are advertised everywhere but until you have a good comparison, you can’t know that you have the smartest.
Business is a constant learning curve and to be honest, you will probably make a few mistakes along the way. However, as long as you follow these principles, you shouldn’t go too far wrong.