5 Costly Spending Mistakes Small Businesses Make

hmrcxx_3572655bThere can when you’re first starting out seem like a lot of expenses – you have marketing to get going, new equipment to buy, training courses or educational tools and books to purchase … lots of shiny things to attract the newbie business owner. But here’s the thing, do you really NEED them?

When you’re just starting out and wanting to keep your costs down, extra expenses can drive your start up into the ground.  Here are 5 costly mistakes new small business owners make and some guidance as to how you may like to spend your money instead.

Buying to Impress

if the idea of purchasing the latest, newest equipment, marketing product is based purely on a desire to impress your clients – don’t.  Far too many start up businesses fall into the trap of thinking you need the latest of this and the greatest of that but you don’t.  Seriously the object of starting up is to make a profit, save your money, buy the essentials, go make some money then move up a gear.

Marketing Mayhem

A number of small business owners have literally thrown money at every conceivable marketing idea that popped into their head!  When new clients came to them, they then didn’t know from what piece of marketing (because they had done so many) that new lead/prospect came from.

My advice would be to choose maybe 5 – 8 low cost marketing strategies such as networking, improving your web presence, social media etc, monitor the results from these, drop what isn’t working and ramp up on what is working for you and it’ll be different for everyone.  Once you have some more funds in the pot you can then explore more expensive options should you wish to.

Attending Expensive Shows/Expos/Conferences

When you’re a new business I know that you need to forge new relationships, make connections and gain and expand your knowledge.  Just ease up and get a little picky about the ones you do attend.  When networking, define your purpose before attend the event, look at past events and tweet to prior attendees about it for useful input.  If you can, find some leaders in your industry, take them to lunch, coffee and soak up as much information as they are willing to share.  Good advice early on in your business will literally pay dividends for years to come.

“I’m spending to reduce my tax liability”

Too many small businesses spend their profits on things they don’t need at that moment, simply to avoid or reduce their tax liability.  A business should definitely invest in itself and take the tax deduction for it.  But spending unnecessarily just to avoid paying tax is just foolish.

Doing it All Yourself

Like most entrepreneurs when we start out businesses we are chief cook and bottle washer, we learn how to do some techie stuff, we learn how to set up social media, I’ve known others who spent vast amounts of money on website themes and then the courses teaching them how to create their website.  Now, don’t get me wrong if you are planning on being a web designer then that’s all very cool but otherwise we just spend hours putting tonnes of pressure on ourselves to wear so many different hats.  The lesson here is to recognise what you are good at – hire out the rest.

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