The excitement of finally having started your business is one of the BEST feelings in the world. It’s what helps you pull all-nighters, network like there’s no tomorrow and keep the faith when the results aren’t exactly showing yet.
But the excitement and enthusiasm, whilst incredibly useful, has a dark side.
The hunger to succeed, that keeps you motivated, also makes you want to spend your savings. Or whip out your credit card for anything that might help you grow your fledgeling startup.
The thing is, you might not know what is worth spending money on and what isn’t during the early days. You’ve yet to gain the experience of what’s essential, and what’s a ‘nice to have’.
And since most businesses fail because of cash flow problems, it’s important to learn from those who’ve gone before what isn’t worth spending money on during your first year of business so you can survive those tentative first months instead of running out of money.
We asked our fellow small business owners what they wasted money on in the first year… here are the 7 most common answers.
1. An overly fancy, complicated website
It’s so tempting to spend thousands of pounds and hours of time on a website with all the bells and whistles but it’s a dangerous trap for many new business owners and lots of entrepreneurs admit the money would have been better spent on marketing and getting clients.
Yes, you need a website but focus on providing the essential information your prospective customers are looking for and keep it as simple as possible. Plus it’s so easy and affordable to DIY these days with providers such as Squarespace or WordPress, you might never need to fork out thousands of pounds
2. Office space
For a little while when I started out, I didn’t feel like a “proper business” because I worked from home but when I started looking at the cost of hiring premises all the extras like rates, services, furniture and internet all added up. Plus you’re often locked in for at least 6 months.
There’s absolutely nothing wrong with working from home but if you really need to create a barrier between work and home, find a co-working space locally.
3. Branded marketing materials
I still have a large box of postcard flyers under my desk that have never seen the light of day and have now become a rather expensive and ugly footstool. When I confessed this to a few fellow business owners they ALL admitted to excitedly getting leaflets designed and printed and either not needing quite so many or never getting round to distributing them!
Get 50-100 business cards printed and see how much you use them before diving into branded notebooks, flyers, pens and t-shirts…
4. Print advertising
About a month into starting my business I received a phone call from a local magazine telling me they’d love to feature my business and I could purchase a half page advert to promote myself to their readers. I was so flattered (and naive!) that I dropped a couple hundred pounds on the ad space. The results? Crickets. Nobody contacted me as a result of that ad (and yes I asked!).
I’m not saying print advertising isn’t a good marketing channel BUT it’s expensive and when cash flow is so important, you could spend a fraction of that on some highly targeted Facebook ads instead. Approach with caution!
5. Events and conferences
When I polled my peers many said that the urge to get their name out there and reach a wider audience led them to pay for a stand at events where they thought for sure they’d get a return on investment and build relationships… but didn’t.
Their advice? Go as a visitor in your first year and talk to people who’ve taken out a stand to see if it’s been worthwhile. Take note of footfall and listen to the conversations between the visitors and exhibitors. If it then looks like a good fit, you can register for the next year.
6. Hiring staff too quickly
If you’ve yet to prove your business can pay you a salary, it’s probably not a great idea to start employing staff. You may need to bring it skills and experience to help you run efficiently but it’s not just wages to consider – you’ve a duty to your employees to pay them properly, provide pension contributions, sick pay and there are many other associated costs.
Instead of hiring someone into your business, first, see if there are tools you could be using to automate certain tasks. Alternatively, try outsourcing tasks to a virtual assistant or freelancer to reduce the risk until you know your business is able to take on staff.
7. Too many courses overwhelming you
An appetite to learn is a part of the entrepreneur DNA and when you immerse yourself in startup world you quickly realise how little you know! And there are so many eCourses and webinars out there it’s easy to end up buying all the courses in a desperate attempt to fill your knowledge gaps.
But course-junkies beware… you can’t just buy a course and absorb the knowledge by osmosis and expect an ROI. You actually have to implement what you learn. And, too many courses can lead to massive overwhelm and a feeling of inadequacy that’ll kill your motivation fast.
Prioritise what you need to know, pick one course at a time and be sure to implement before diving into the next shiny course!