Spend Where it Counts

by Elle Likopoulos 18th of August, 2022

Spend Where it Counts

Putting your plans and ideas into motion and giving life to your business can be a very costly exercise. There is a whole new world of products and services that are designed to support and nurture your delicate little newborn business, all of which sound amazing but come with a price.

You need to make sure you’ve allocated a certain budget for the initial outlay, factoring in all your costs and cash flow needs to launch. If you start without having a firm budget in mind it is very easy to get swept up in the romance and excitement of the whole process.

Remember the ultimate objective of a business is for it to be profitable and begin generating enough revenue to allow steady annual growth for re-investment.

Set Your Budget

A budget doesn’t necessarily mean you have to sacrifice the look or concept of your business but it does mean you need to spend consciously.

If for example, you’re planning to open a salon, you may consider buying one that is established already. Rather than spend $70,000 on fitting out a blank canvas, you might take over a newly built existing salon for $30,000 and save on asset costs as well as set up time.

The money left over which you’ve now saved, can go towards hiring that marketing agency you like to build up your exposure.

Even if you’ve got a unique product or concept that doesn’t exist- you may find something in a similar industry or style that you could take over and customize to fit your brief. It’s all about being open minded and flexible to ensure you open up as efficiently as possible. You can always add new things to a business that is making money but you can never recover the money spent, in a business that is struggling.

Why Businesses fail in the first 3-5 years

Whilst it’s important to be thrifty with your money, you also need to remember that certain things come with certain price tags. In my many years’ experience, representing the sale of businesses across every industry imaginable, there is almost always the same common factor between the businesses that fail within the first 3-5 years of trade. Can you guess it?

I’ve run the exercise of asking first time buyers this question, and I’ve yet to have someone guess correctly. The answer is all the businesses that failed in less than 5 years of trading spent little to no money on hiring an accountant advisory service or a solicitor with commercial experience.

The focus is always around the creativity and branding of the business which generates instant physical or visual reinforcement that your business is coming to life. The idea of spending money out of the budget for business structuring advice or for legal advice around the many clauses in the lease you want to sign never seems feasible at first.

The reality is that your business can’t survive on good looks alone. Your business needs solid foundations of financial structure to rest on and the legal framework to prop itself against challenging times.

Tags: success entrepreneurs growth career