You’ve got to spend money if you’re a small business owner. I’ve put a list of all the non-negotiables below.
But before you go ahead and decide how to spend your money, first you’ve got to know how much you have to spend.
To that end, there are two non-negotiable pieces that all of my clients need to have in place.
The first is a decent book-keeping service.
Unless your business IS book-keeping, it’s insanity taking care of this yourself.
You need a good book-keeper to take care of all of your expenditure and income.
Over the years I’ve tried various book-keepers and book-keeping services. Most of them required that I manage – to some degree – the receipts and ledgers myself using Quickbooks or Xero or something similar.
Which is something that small-business owners should not be spending their time on.
This is a service that you can entirely forget about for all but 20 minutes a month – if that – when you’ll get a notification that they might, perhaps, need your help identifying a transaction or a requesting a statement that they weren’t automatically able to grab on your behalf.
Bench was a complete game-changer for me. You owe it to yourself to use it. You can find out more information here.
The second piece of the puzzle is cashflow projecting and budgeting. If you don’t know how much money you have to spend, or how long it takes until your money runs out, that’s negligence, frankly.
The best budgeting software for small business owners is You Need A Budget.
It’s free to get started and it will change your relationship with money within 34 days. No bull. I use it regularly, multiple times a week, for both business and family expenses.
For bonus points, and to make it seriously powerful, combine it with all of the principles in Profit First by Mike Michalowicz and start to see a guaranteed profit in your business every quarter.
So … on to the list, and if you’d like to see a full list of ALL of the software I use to run my small business, then check out this new post:
How Small Business Owners Should Spend Their Money
1. Household Help
If you’re self-employed, you’re not billing your clients if you’re doing the dishes, ironing your pants or taking out the trash. Unless that is your job, of course. Additionally, you’re not going to be at the top of your game if you come home to heap of domestic chores that need doing every single night.
Find a cleaner that charges less than you do. You’re giving something back to the community, spreading the wealth and giving yourself crucial cocktail time. High five on your first outsourcing gig.
2. Number crunchers
Unless this is what you’re particularly good at, filling in tax forms and working out your liabilities is best left to the professionals. I’ll put it in the same bracket as good design: see below. Although you may be able to hack out a reasonable job on your own, the chances are that you’ll do more harm than good, and your hours will be better spent elsewhere.
Whether it’s selecting a mentor or enrolling in an Arabic course, you should pay for your education. There are tons and tons of free resources out there. My current free favorites are iTunes U, Longform (for diverse erudition) and the Khan Academy for catching up on what I should have been paying attention to at school.
Blog posts are published daily with spurious titles like “Seven Things Small Business Owners Should Spend Money On” and you’ll learn a fair amount about a fair amount by digesting information on a daily basis.
But if you want to commit to learning, the bigger your commitment, the bigger your learning – largely. You can pay three bucks for a day-long seminar and you’ll take something out of it. If you pay $300, you’ll be sure to take a lot more out of it.
This doesn’t mean that more expensive is better. It often isn’t. A well-chosen second-hand paperback may teach you a lot more than a crappy retreat. But if you’re looking for teachers, there’s often a very good reason why the better folk charge more – because they’re better. Period.
By spending money on anything, you enter a different level of contractual obligation. If I ask you to fix the plumbing in my house for free, then I’m not going to have much leeway when it comes to my demands. I’m also not going to have many options for recourse if you do a crappy job. So it is with learning. Select your mentors carefully, be exigent about what you expect and pay for the privilege.
4. Looking good
This one’s applicable to everybody – not just small business owners – although small business owners likely have some kind of image that needs to be maintained if gravity is going to be used as a marketing angle. Clothes, by and large, are too cheap.
Here in Malta, which is like a Coney Island of the Med, you can spot the British tourists from 200 paces by the quality of their threads. A horrible, snobbish thing to say, I know, but compared to the immaculately tailored and coiffed Italians and Maltese, they stick out like a polyester birthmark.
That’s because clothes are too cheap. They’re stitched together by the bleeding fingers of Bangladeshi pre-schoolers and sold for a couple of quid back in the UK – or US – at a mark-up of 300%.
So you’ve got an ethical and an aesthetic consideration when buying your clothes. A couple of well-made suits and some fitted shirts will do you many, many more professional favors than a wardrobe full of tat. Buy wisely.
5. Your customers
You should be spending money on acquiring your customers. There is no such thing as a freebie. At some point down the line, you have invested heavily of your time laying the groundwork for getting your new customer on board.
I find it surprising that new business owners will often drop a couple of grand to hang out at conferences with their peers and competition, but will be entirely unwilling to pay for advertising or PR to directly address their potential consumer base.
Take two otherwise equal new business owners.
One spends eight hours on Twitter.
The other spends eight hours spent picking up the phone and sending beautiful information packs to laser-targeted potential clients, then follows up by jumping in the car and going out to meet them.
Who’s signing more clients more quickly? Yep – the one who has spent money on printing, postage and petrol. Every time.
You might also like to consider spending money to welcome your customers and to keep them. A gift in the mail will cost 20 bucks. But they’ll remember you. Alternatively you can aim for zero expenses. That is foolish.
6. Knowing Your Customers
Spend a little on knowing who your customers are. As a small business owner, you have two crucially important assets. There’s your product or service and the rights associated with it, and there’s your database of leads, prospects and clients.
Imagine you had to give one up. You have to make a choice right now to let one go. If you’ve been in business for any length of time, it’s likely that you’ll drop all rights to your product and keep your hungry buyers, then find something else to sell them. You’d be mad not to.
But a frightening number of small business owners have no structure in place for knowing who their clients really are, or what makes them tick. A simple customer (or contact) relationship management tool will fix that for the cost of a meal or two a month.
Contactually will do that for you. Keep notes on everybody in your life. Get reminded to keep in touch.
Aweber is about as straightforward as email marketing gets. Capture leads, build trust and credibility, make sales offers. Know who opened your emails and when, and get a very, very clear idea of how engaged your audience is.
Infusionsoft ties all of these together with added magic beans. Sales automation, smart link tracking, if-then follow-up, shopping cart and affiliate management all in one. It’s not cheap, but it will save you two hours a day, minimum, if you’re dealing with a larger number of people and you’re reasonably active at staying in touch.
All the marketing you do will be for nothing if I come and check out your home-base, or your website, and I don’t like the look of what I see because it appears you hacked it together yourself using free tools and badly-chosen typefaces. If your business card has perforated edges and bleeding ink, and your photos are blurry and badly-cropped, I’m going to make a snap-judgement call on the amount of time and effort you’re willing to invest in your business.
The amount I think you’re prepared to invest in yourself correlated directly to the amount of money that I’ll be prepared to invest in you.
Pay a designer to get your stuff done. It will be some of the best money you spend on your business. You might think your design looks great. Your audience will be the judge of that.
8. Coffee, obviously.
There are a handful of free things you can do every morning to boost your business as well. Click here to find out more.