It’s important to manage your money tightly when you are building a business. But there are some areas where skimping would be a false economy and cost you more in the long run.
The Covid crisis has shown us that lots of expenses that we took for granted can be slashed overnight and not make much difference at all. Lots of businesses have done away with permanent office space and international travel, with little effect on the bottom line.
What things you should not be strict with money on?
Don’t skimp on your marketing strategy or company culture. You need to invest in each of these items from the very beginning if you want your business to thrive. If you do not have a clear sense of direction or purpose for how to proceed, then the risks are multiplied even more than your company will be aimless and unfocused.
Here are 5 key areas you may not have thought about where it’s not smart to skimp when you are building a business:
- Business software
- Business insurance
- Market research
- Hiring key people
1. Business software
It’s all very well switching to a low-cost business software suite, but if you can’t easily exchange documents or collaborate with clients or partners then it’s obviously a false economy. In the creative sectors, the top software packages include: Photoshop, Indesign and Final Cut Pro and creatives tend to use Apple Mac computers.
The business world is more likely to use PCs and the leading software package by far is Office 365. This includes the traditional office suite of Word, Excel, PowerPoint, and Outlook. It also includes Teams, which has become an essential communication and collaboration tool for many businesses during the Covid crisis. There are various levels of Office 365, with Premium level including advanced management and security tools. Check out microsoft 365 business standard vs premium and make sure that you have the level of coverage that your business needs.
2. Business Insurance
What is the worst that could happen to your business? What are the key risks? Assess those with a cool eye and then make sure that you are insured. If you are not, or not covered to the correct level, then one crisis could destroy your business overnight. Some insurances are of course a legal requirement, such as vehicle insurance and employer liability insurance. If you are governed by a regulatory body or contract with larger companies they may also stipulate requirements, such as a level of Professional Indemnity cover. Other types of insurance your business may need, depending on your industry, include: product liability, cyber liability, key person insurance, public liability, and business interruption insurance.
3. Your website
Whatever line of business you are in, you need a website. It doesn’t matter if you don’t make sales from the site or even if you don’t expect people to find you online – these days potential customers expect to be able to check you out online. So you need to make a good first impression. It’s perfectly possible to create a beautiful site these days with a DIY package from Wix or WordPress. But don’t skimp on photos and copywriting. The site needs to look and feel authentic and you can’t do that with stock photos and bad writing.
4. Market Research
Market research is the art of listening to customers and giving them what they want. First, you need to make sure that you have the right customer group, that is not always who you expect it to be. As the business owner, you can become over-committed to your own idea of what customers should want rather than what they do want. For that reason, it is well-worth outsourcing key stages of market research. For example, mystery shoppers can give you an excellent insight into how your business comes over to unbiased customers. Online surveys of existing customers can give you a great insight into your ideal customer, what matters to them and how you can build your brand around them.
5. Hiring Key People
The average employee costs £12,000 to replace. Not to mention the hassle and effort needed to train and settle in the new hire. So take care to get the right people in the first place and then treat them as well as you can. The more you skimp on pay and conditions the higher your staff turnover is likely to be. That may be OK in industries like fast food where the roles are highly standardised, But if your people are your greatest asset, if they need specific skills and the ability to take initiative then you should value them accordingly.
Why is being generous on these things important?
It’s important to invest in the right things when first starting out as a small business if you want to build your business to last. It might take a bit longer to launch your business this way, but in the long run, you are much more likely to have a business that survives and thrives.