5 Things You Shouldn’t Spend Money On When Starting a Business

Some things are worth spending your money on. Others aren’t.

Worth it:

Not worth it:

When starting a business, here are 5 things you shouldn’t spend a lot of money on:

  1. Fancy shmancy marketing materials. Brochures, pamphlets, and other uber-glossy, 4-color ultra high-end print materials are too expensive when first starting out. Go the blogging route for a bit of marketing muscle and exposure. Do a little homework on SEO and targeted advertising through Google Adwords before spending on printed marketing materials. If business cards are a must (and they typically are) try an online service like Great FX Business Cards where you can design your cards online.
  2. Software. I’m not advocating the use of pirated software, but there are plenty of online tools that are inexpensive or free, and can be just as effective for starting up your business as more traditional software. Ex. Google Spreadsheets, Writely, Blinksale, StikiPad, Skype
  3. Advertising. It may depend somewhat on the business, but advertising is a tough way to go off the bat. It’s going to be very expensive and with an early business probably not generate the returns you want. Instead, try public relations (PR). PR is less expensive and can be effective at generating buzz/awareness and direct leads. Try generating referrals and networking, which usually involve a ton of work but little cash upfront.
  4. Office space. Typically one of the biggest expenses when running a small business. Avoid it if you can. Go virtual. Go home office.
  5. Staff. You may need to bring people onboard right away, but if you can outsource, try that first. Definitely outsource things like accounting, bookkeeping and other non-essential functions. Get good referrals, negotiate good pricing and barter if you can. This is where your network will play a huge role. If you’ve got contacts or friends willing to provide these services for free or at a greatly reduced price, all the better! For essential services, if you do have to hire people, think sweat equity. You might not be comfortable taking on partners, but if they’re minority stakeholders it might be worth the cut in payroll.

Don’t Forget: It’s Blog About 5 Things Week! Join the fun by writing a post on 5 things; 5 tips, 5 steps, 5 ideas, etc. Link back here to tell me about it… Read More!

Photos by Kleiobird and idreamofcaffeine on Flickr

October 2, 2006 Posted in Entrepreneurship by

  • Jennifer

    Not advertising a new business is the DUMBEST piece of advice. Sure, take out a $200,000+ business loan but don’t let anyone know where you are located or what you offer. PR will only take you so far. If you don’t include a decent yearly ad budget into your business plan then your business probably won’t last long…or you’ll just make enough to get by. Who wants that? I deal with new businesses on a daily basis and all the ones who don’t set aside a yearly ad budget are closed with in 8-15 months. If you want your business to fail…don’t advertise!

  • http://www.instigatorblog.com Ben Yoskovitz

    @Jennifer: I’d still argue that advertising is overrated. Again, it depends on the business. A local restaurant will have to advertise. A freelance writer who is getting a lot of contracts from the Web, doesn’t need to.

    I still would argue that blogging, using social media and the Web effectively can work for almost any business and supplant much of a company’s advertising budget early on.

  • http://www.instigatorblog.com Ben Yoskovitz

    @Jennifer: I’d still argue that advertising is overrated. Again, it depends on the business. A local restaurant will have to advertise. A freelance writer who is getting a lot of contracts from the Web, doesn’t need to.

    I still would argue that blogging, using social media and the Web effectively can work for almost any business and supplant much of a company’s advertising budget early on.

  • http://www.greatfxbusinesscards.com/ Chris Brunner

    @Ben, @Jennifer: Agreed that it depends on the type of business you are running and the products and services you offer as to where and how you advertise. As an Internet-based business, GreatFX has no need to advertise on local television or radio. Local business publications would be a much better investment, though I admit I have not yet taken an ad out.

    To advertise on the cheap, I’ve been visiting networking groups in town, getting to know other local business owners. This helps improve my communication skills and cheap advertising/connections are a nice perk too.

  • http://www.greatfxbusinesscards.com/ Chris Brunner

    @Ben, @Jennifer: Agreed that it depends on the type of business you are running and the products and services you offer as to where and how you advertise. As an Internet-based business, GreatFX has no need to advertise on local television or radio. Local business publications would be a much better investment, though I admit I have not yet taken an ad out.

    To advertise on the cheap, I’ve been visiting networking groups in town, getting to know other local business owners. This helps improve my communication skills and cheap advertising/connections are a nice perk too.

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  • http://www.onebillionpageviews.org/index.html TV License

    These are some very good areas to cut back on in the begining. If you can. Starting out is hard, and you should always use all the free or cheap resources available to you, and you will have to do most if not all of the work by yourself because hiring other employees costs a pretty penny

  • http://www.bcab.org business information

    I agree with your points on office space and also. But I dont agree with your views on advertising.

    I think any kind of investment in advertising will always pay off and that is if the right medium is chosen and there are many mediums out there that can serve specific purposes.

    Social Networking is the best option.

  • http://www.simpleonlineshop.co.uk legal docs

    It is true any one can create a passive income at home,

    its no big deal no a days.
    You can also start off ,getting forms and all kinds of

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    there are a lot opportunities out there and all kinds of

    other affiliate marketing programs out there, so what

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  • http://www.jitbit.com/netprofileswitch.aspx network settings switcher

    Well not always it also depends on what kind of a business you are starting, don’t you think?

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    Well for on it really is a good post .
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  • http://verytogether.com/success/ BusinessWoman

    I agree – Your investment should be your time, expertise, inspiration, and your great ideas, implemented through discipline and long hours. Success is not just what you do: It is what you don't do, too. And using up resources early could keep you from going the distance.

  • http://verytogether.com/success/ BusinessWoman

    I agree – Your investment should be your time, expertise, inspiration, and your great ideas, implemented through discipline and long hours. Success is not just what you do: It is what you don't do, too. And using up resources early could keep you from going the distance.

  • http://verytogether.com/success/ BusinessWoman

    I agree – Your investment should be your time, expertise, inspiration, and your great ideas, implemented through discipline and long hours. Success is not just what you do: It is what you don't do, too. And using up resources early could keep you from going the distance.

  • http://verytogether.com/success/ BusinessWoman

    I agree – Your investment should be your time, expertise, inspiration, and your great ideas, implemented through discipline and long hours. Success is not just what you do: It is what you don't do, too. And using up resources early could keep you from going the distance.

  • http://thesis-masternow.com/ Masters Thesis

    I think there are more than 5 things you shouldn’t spend money on when starting a business. People often think how to earn more, but they also should think how to spend less, because it could increase their income too. We often waste our money on unimportant things, but we can increase our income without loosing quality of life. I hope these 5 great suggestions will encourage people to spend less on unimportant things and thanks to the author for sharing these useful ideas.

  • http://thesis-masternow.com/ Masters Thesis

    I think there are more than 5 things you shouldn’t spend money on when starting a business. People often think how to earn more, but they also should think how to spend less, because it could increase their income too. We often waste our money on unimportant things, but we can increase our income without loosing quality of life. I hope these 5 great suggestions will encourage people to spend less on unimportant things and thanks to the author for sharing these useful ideas.

  • http://thesis-masternow.com/ Masters Thesis

    I think there are more than 5 things you shouldn’t spend money on when starting a business. People often think how to earn more, but they also should think how to spend less, because it could increase their income too. We often waste our money on unimportant things, but we can increase our income without loosing quality of life. I hope these 5 great suggestions will encourage people to spend less on unimportant things and thanks to the author for sharing these useful ideas.

  • http://thesis-masternow.com/ Masters Thesis

    I think there are more than 5 things you shouldn’t spend money on when starting a business. People often think how to earn more, but they also should think how to spend less, because it could increase their income too. We often waste our money on unimportant things, but we can increase our income without loosing quality of life. I hope these 5 great suggestions will encourage people to spend less on unimportant things and thanks to the author for sharing these useful ideas.

  • http://thesis-masternow.com/ Masters Thesis

    I think there are more than 5 things you shouldn’t spend money on when starting a business. People often think how to earn more, but they also should think how to spend less, because it could increase their income too. We often waste our money on unimportant things, but we can increase our income without loosing quality of life. I hope these 5 great suggestions will encourage people to spend less on unimportant things and thanks to the author for sharing these useful ideas.

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Ben Yoskovitz
I'm VP Product at GoInstant (acq. by Salesforce).

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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