When starting a business, the costs add up so fast that entrepreneurs are usually looking for ways to save money rather than increase costs.
It’s no joke that the number of essential, necessary costs can be enough to make a new business owner’s head spin. Nonetheless, not all business costs are compulsory. While in the business planning process or the early stages of operation, business owners will undoubtedly write off some non-essentials as unnecessary, too expensive, or earmark them for some time “down the road.”
Arguably, you shouldn’t spend your hard-earned startup funding on $1000 office chairs. However, some expenses are worth shelling out for, and will pay dividends down the road when the investment is made up front.
Worthwhile expense #1: Market research
When writing a business plan, most new entrepreneurs are hesitant to invest in thorough market research, mostly for financial reasons.
It may seem sufficient to write the marketing section of your business plan from a purely theoretical standpoint, without spending the money to reach out and speak to potential consumers. However, without market research, you are operating in the dark when it comes to your product and your customers.
With that in mind, make sure you invest as much as is necessary to fully research your market and validate your business idea.
Why it’s worth the money:
You can find your market
It is easy to think your target market is one group, but chances are that market research will force you to take a closer look. Without market research, you may spend many hours and many dollars trying to reach and speak to the wrong market, when it turns out your product or service is better received by another segment.
Market research in the early stages of starting a business will allow you to focus your offering on serving those who are most important to your bottom line.
It helps you validate your concept
Your business is in the market of selling to your target consumers. Through market research, you will learn whether your product or service resonates with your target market.
If you’re not filling the gap that the target market needs filled, you are wasting your time. Market research will uncover the wants and needs of this target group, enabling you to deliver the best product for your target market.
For more on market research and idea validation, check out these resources:
- Market Research Resources
- How to Do Market Research
- Going Beyond the Napkin: How Do You Know If Your Idea Is Any Good?
- A Bplans Checklist: How to Tell If You Have a Good Business Idea
- 6 Business Idea Validation Tactics to Improve Your Business Planning
Worthwhile expense #2: Branding
In traditional wisdom, branding was only seen as important in business-to-consumer (B2C) business models. The new school of marketing stresses the importance of branding for all businesses, including those selling to other companies.
Research says branding signals should last at least a decade, so building your brand early can set up your business for success. Creating a new brand is a significant investment, and there is really only one opportunity to do it—so it must be done right.
Why it’s worth the money:
You’ll connect with your customers
With your target market in mind, your brand will ensure that your product or service is the preferred choice in the mind of your key audience. In this way, brands create associations. A brand puts the elements in place that help people understand why they should choose a particular product or service over another.
Conceiving your brand identity early will enable your consumers to make these connections as soon as possible, placing your business in their mental forefront.
Strong branding is linked to business performance
Brands drive consumer behavior, and consumers are what make your business successful. At the foundation of your brand is its idea—the promise you make and keep in the marketplace.
Customers experience your brand based on their perception of it. Is it relevant and differentiated? If so, this will ideally lead to a purchase, and therefore business success. Branding early helps to complete this chain from brand to bottom line.
For more on creating a brand for your business, check out these resources:
Worthwhile expense #3: Social media management
Social media is written off as unnecessary by many new business owners simply because they don’t know how to use it. However, with your brand and market research as support, social media becomes much less nebulous.
Why it’s worth the money:
You can engage your audience
Consumers are the heart of your brand and your business, and social media is today’s method of building an audience around your product or service.
Find out what networks your target market uses most. Maybe your best bet is LinkedIn and email, or perhaps your business would be better suited to post on Instagram and Pinterest. Building your audience early means you’ll be speaking to an active list of followers that want to hear what you have to say and will spread your message for you.
It helps you build authority
With an audience, you can build authority. Constant learning and sharing with your audience on social media means that over time you’ll become an authority on that topic. When potential customers come looking for your product, they’ll contact you first because you’re a known expert.
It is beneficial to start building authority as soon as possible when starting a new business venture, because with enough authority, your target customers will seek you out—rather than the other way around.
For more on social media marketing, check out these resources:
- How to Choose Which Social Media Platforms Are Right for Your Business
- How to Calculate Social Media Marketing ROI for Your Small Business
- Social Media Response Flow Chart for Small Businesses
Worthwhile expense #4: Company culture
Finally, businesses may wish to save startup money by skimping on building culture. Think of culture as your company’s personality, as seen from those on the inside.
Everything from employee perks to how you work makes up your company culture. Even if you are an office of only one or two, culture still exists and permeates what you do. Building culture is essential in the startup phase of any business because it builds the foundation of your company from the ground up.
Why it’s worth the money:
Employee happiness is vital
A Columbia study showed that the likelihood of an employee leaving an organization with strong culture was only around 14 percent. Loyal, engaged employees are just as valuable to your organization as loyal and engaged customers. These happy workers will give more, and bring in additional happy workers.
So, don’t skimp on coffee. Offering free coffee (good quality, that is!) or a surprise lunch on Friday can boost happiness and engagement levels, strengthening culture and your business simultaneously.
Productivity equals profit
A strong company culture leads to a strong team. Happy, productive employees are more likely to bring up new, innovative ideas for how to do things, helping to create solutions that might not be found in more oppressive workplaces. What’s more, happy employees are more likely to sing the praises of your product or service with free word-of-mouth marketing.
Building a friendly, inclusive culture from day one will set your business on the path to success.
For more on company culture, check out these resources:
- What Defines Your Company Culture?
- Why Culture Is Crucial to Success, and How to Create Your Unique Corporate Culture
- The ROI of High Employee Morale
While it may be tempting to save money on market research, branding, social media, and company culture when starting your business, investing in these areas will pay off many times over with happy employees, happy customers, and a thriving business.