Starting A New Business? How Much Do You Need To Spend And Where?

Published: 08th April 2015
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At the moment two of my friends are in the process of setting up their own practices in the field of alternative health. They are taking such radically different approaches to getting started that it has really gotten me thinking about what it takes to make a startup successful. How much do you need to spend? Where is the best place to spend it? Should you strike out alone or try to collaborate with complementary businesses?

As it concerns these two businesses, only time will tell who's got it right. But many people don't have the luxury of choosing the all out approach and in those cases you have to be smarter. Limit your spending to the areas that really count (hint: it's not professionally designedcompany stationary) like enhancing your customer experience with tools such as customer management software. By spending smart you can run your business on very little which means more profits to enjoy when you pull it off.

All business expenses (and expenses in life in general) can be broken up into two categories; 'essentials' and 'nice to haves' . This will depend largely on the type of business you are in. There may be permits you need obtain or accreditation required. These are obviously must haves. There also may be essential equipment you need to run your business for example a hairdresser needs scissors, just as a plumber needs tools or a computer programmer needs a computer. Some startup vitals that are universal include a telephone number and a business card. Is a website for a new business essential? In todays market I'd say not really. You see plenty of companies today that hold off on creating their own webpage and instead have a Facebook page or a listing on Google.

Then explore how you can obtain each of your essentials cheaper. The friend who is setting up his business on a tight budget managed to pick up a near new treatment for half the price of a new one. When I was operating in the financial education field I had to have an entry level financial advisors certificate, by shopping around I got the same accreditation for 30% less than I would have paid at the most popular provider. For things like office furniture consider buying at auction.

Don't go overboard. A few areas that are popularly regarded as 'nice to haves' are in actual fact 'eesentials'. One of the most crucial is contact management software. It doesn't matter how great your office furniture looks or how cutting edge your business card design is if your customer service is rubbish. A contact manage software package (or customer database) will help you track and nurture your customer relationships. If you put the systems in place at the beginning to support customer retention and referral marketing you will be building your business on a strong foundation and protecting your most valuable asset, your customer database. And a good contact management software package can usually be achieved on a tight budget. Just steer clear of the big names and go for the smaller providers. There software is very good and they will usually give new startups free access while their business is still growing.

Whether you have a huge new business budget or just a little the important thing is to try to keep a tight reign on startup expenditure. You will experience rough times and that is when it is great to have a cash reserve to see you through. Spend on the areas that are most important like methods to improve customer service, save where you can on equipment and window dressing.


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