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7 Things You Shouldn’t Spend Money On In Your 1st Year Of Business

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.

 

 

DIY website builders like Squarespace and WordPress make sense for many startups

 

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

 

 

If you don't think running your business from home will work, coworking spaces might be a good idea.

 

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.

 

 

Branded marketing materials can be an expensive mistake if you do not need them.

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…

 

 

There are more cost-effective routes to reach your audience than print advertising

 

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!

 

 

Event space can be expensive so find out if its worth the money and effort first.

 

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.

 

 

Freelancers or even automating certain processes could be cheaper than hiring staff

 

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.

 

 

Your appetite to learn is great but don't be ripped off buying a load of courses

 

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!

Prioritise what you need to know, pick one course at a time and be sure to implement before diving into the next shiny course!

If I can offer you one last pearl of wisdom before signing off, let it be this money mantra from Martin Lewis of moneysavingexpert.com that I ask myself whenever the temptation to spend on my business takes a hold on me:

  • Do I need it?
  • Can the business afford it?
  • Have I checked prices or more affordable alternatives elsewhere?

As someone who wasted money on most of the above in her first year of business, I will tell you now that despite the above warnings, you WILL waste money on something during your first year. It’s part of learning and growing as an entrepreneur.

But, hopefully, you’ll avoid racking up a tonne of debt or really making a financial mistake that’ll stop your business dreams short.

 

Jen Smith is a freelance writer and content strategist. Follow her @_JenSmith

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