The business expenses you should NOT be bargain hunting for
Business owners and entrepreneurs alike have two financial missions on their minds at all times: increase revenue and decrease costs. But when it comes to saving money for our companies, how do we decide what to cut and where to be thrifty? Well, I am not going to dictate how you manage your funds (until, of course, I decide to buy your company) but I will share some tips on the areas that should definitely NOT be targets for cost cutting.
Bargains are everywhere. They can be anything from a great discount on beer at your local liquor store to a low interest rate on the financing of your new expansion. Bargains are things that excite us and can be almost irresistible. But what happens when we mistake amazing deals with amazing wastes of our precious cash? Huge business problems are what happens. If we fail to recognize and take to heart several very simple business rules such as “you have to spend money to make money” and “you get what you pay for” then we will never attain the success we yearn for. We will find ourselves persisting in mediocrity and receiving less than our desired return.
So here are my suggestions for ten parts of every business that should not be underfunded:
Every company needs one and it isn’t hard to get one made. My kid brother could throw me up a functioning website in an hour. You could bring in a college intern and have them get you online or even try to do it yourself. But I warn you of one thing: it WILL be obvious. One thing is for sure, the Internet browsing population is evolving and they are getting more savvy. Internet usage is on the rise and user’s standards are rising as well. It is no longer easy to fool your visitors by using some pretty template you found. Chances are REALLY good that many of your visitors have seen it already.
Apart from the increasing need for a unique design, users are demanding greater functionality. Your site should feature social sharing buttons and a social login if you want comments. You should have an intuitive navigation structure and appropriate calls to action. An online chat feature where users can IM with a customer service or sales rep is almost a must. Also, mobile users cannot be neglected. Is your site mobile friendly?
All of these things can be very expensive but the nice thing about a website is it will typically be a one time cost. If you get a nice one put together from the get-go that professionally represents your company than all you need to do is build upon it which is not nearly as costly.
2. Graphic Design
What’s in a brand? The answer is everything that people remember about your company. If grabbing some clipart and throwing your business name below it is all the time you have for your visual branding then you can basically expect your customers not to give you a second look. Time spent making your brand visually appealing is time well spent. We all want a brand we can be proud of. Employees love working somewhere with a cool brand. Our shareholders want to invest in brands they find memorable and look promising.
The graphics you use to represent your company should never be something you throw together hastily. When someone hands me a business card that was obviously a template from Vista Print I can’t help but sigh. It says so much about how you wish to present your company and how much you care about it.
3. Legal Documents
I remember what it was like running a startup business. Cash is extremely tight and the paperwork seems like a prime candidate for cutting corners. Besides, I didn’t start a business because I felt my life was lacking in legal jargon and contractual agreements. Why not just grab a template from the web and pay Legal Zoom to file with the state? Because the risks and potential devastating consequences of this are ridiculous, that’s why.
Contracts are a great example of the things you LEARN to love when you are running a business. In the beginning they seem like a pain in the behind but the first time a client throws a tantrum or a product gets returned or a partner decides to take an extended LOA (Leave of Absence) you will know why these matter.
When you begin to realize how extremely successful (and rich) you can become by employing the RIGHT people and keeping them happy, you will stop hesitating when it comes time for bonuses and raises. There truly is a quantifiable cost associated with every change in staffing. When a good worker walks away because your competitor will pay more, you lose BIG time. And I don’t mean just the experienced person you let slip away but you lose MONEY. Lots of it too.
Money is money. It is the whole point of what we do. It is why I am not playing guitar on a beach right now. I am running a business. A business that exists to make money. Now if this is true, doesn’t it make sense for me to take great care and be extremely vigilant when it comes to how that money is handled? For new entrepreneurs I can tell you one thing: there are more ways for money to slip through the cracks instead of into your bank account than you can imagine.
What this amounts to is ensuring you have excellent accounting staff or hire a respectable company AND be VERY actively involved in this department. We may find ourselves getting caught up in day-to-day operations and micro-managing the sales team or the customer service squad but if we are lax on the finance department its like we are stuffing wads of hard earned cash into pockets with holes. For this reason I take very special care when it comes to choosing who can manage my finances. I have met many unemployed accountants or small firms who are willing to handle my books for a great price. But as I said at the beginning of this article, you get what you pay for. And this is the one area of your business you CANNOT afford mistakes in.
Cutting expenses is a huge part of every business. There is no (properly run) business that is not constantly seeking ways to economize operations. But some things, when underfunded, can stall progress at best and at worst bring an entire business down. Don’t make these mistakes. Now go make some money.