How much should I be spending on my business? Like all other things in life, modern businesses tend to overspend, Especially small businesses that are not making money yet.
I constantly am running into startups who are “investing” money to help the business grow. But, too often, they are only growing in the wrong direction.
Instead, it would be best if you focused on spending that will generate sales.
Too many people are spending money on things that will likely not move the needle. Perfect tools that are overkill. Logos design. Software that is way too big for the budget.
Focus instead on spending money on things that will impact your customers.
So let’s step back and examine who you should be spending – and on what.
How Much Should I Be Spending on my Business
Spending money on marketing is usually the biggest issue that will have the greatest impact. Whether the money is via ads, help to do calls, of just your own time connecting and marketing your business. This is number one for a reason.
If you have no income, use a budget of about $10 per week for marketing. If you have more to invest, push it to $100 a week. As you get income, keep marketing as a top expense. Every industry is different, but I like to keep at least 10% of the revenue to use for marketing and advertising.
2. Legal issues
If your business is a threat to get sued or to have an injury, you need to spend the money upfront on getting protection. See my post on Do I Need a Business License or LLC?.
As a rule, I would expect to pay no more than $1000 for this protection (and the insurance) if you need it.
When it comes time to get some help, spend the money on the right people, doing things cheaply (or yourself) is often wasted time and money. Tools like Upwork will help you find the right people for the right price.
Some Places to Save Money
- Quit trying to operate like people who are way ahead of you. Find ways to do the work cheaper.
- Quit focusing on minor issues.
- Use the tools you already have and hack them.
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