Some things are worth spending your money on. Others aren’t.
Not worth it:
When starting a business, here are 5 things you shouldn’t spend a lot of money on:
- 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.
- 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…
- 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.
- Office space. Typically one of the biggest expenses when running a small business. Avoid it if you can. Go virtual. Go home office.
- 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.