A lot of entrepreneurs think that bootstrapping is the most efficient way to start a new company. It gives you a freedom you wouldn’t have if you needed to report all your expenses to venture capitalists or angel investors. Although, some expenses, even costly expenses, are important. Take a look at some of these expenses that are worth the investment.
1. Free Stuff!
Let’s be honest here, who doesn’t like free stuff? But honestly, giving away free stuff, like company t-shirts, will help generate money and business. It can help get people talking about your business, grow brand recognition and may even get noticed by larger companies.
2. Customer Service
Good customer service is very valuable. Marketing Metrics did a survey that reported almost 200 marketing managers revealed that 71% found customer satisfaction to be a major metric in managing businesses. Customer service and satisfaction is a high leading indicator that increases the lifetime value of a purchaser, reduces customer churn rates, helps customer loyalty and improves word of mouth as a major differentiator of your company. Spending a little extra on good customer service will by far pay off in the end.
3. Technical Support
Even if tech is your “thing” or not, it still may be a good idea to outsource some or all of your in-house technological needs. You could keep what you’re good at and outsource the technology you need to run on its own, so you can focus on other important things within your company. Spending hours on server maintenance and working on making your website could be better invested in core competencies. It is essential to business success for your technology to run smoothly. So spending money for great technical support will be easier on you and your business.
4. Powerful Software for Data Analytics
From the very start, you should spend money on robust data analytics software. You can’t improve what you don’t measure and you can’t measure unless you test. Analytics helps you understand what isn’t working when it should be. For data-driven business owners, you need to analyze numbers from a bunch of different sources so you can create an informed viewpoint. Having a powerful data analytics software can help you do all of this.
5. Market Research
Over 100 entrepreneurs that have failed startups took a survey that showed 42% attributed their failure to a lack of need for their product. So never assume you know your targeted customers and what they need. Market research can be expensive and time consuming, but coming out with a product or service to an untested market can be even more expensive and time consuming. Just spend the money from the start to really find out what the right targeted customers and their needs.
6. An Accountant
It can be a pain to know exactly how much money you need to keep aside for your taxes or quit confusing to identify all your valid tax reductions. Get a good accountant so you aren’t throwing money away or risking any issues with the IRS. Most accountants will meet with you by the hour to give advice on your documentation and deductions, then each year they complete and file your taxes, they’ll charge you a fee. It’s not rocket science, it’s just worth it.
7. Financial Advice
It’s very important to pay for good, secure financial advice unless you plan on opening a financial planning business. To save yourself from a rocky road of issues and stress, try getting a tax attorney to set up your books and help show you what should be tracked to help secure your future funding. Never underestimate the need for a long-term financial plan to help your company succeed.
8. Legal Advice
No matter how expensive lawyers can be, good legal advice is essential for startups. Just locate a lawyer who specializes in the business you are starting and pay for the right advice you will need to keep your business afloat. Statistics gather by VentureBeat in 2011, show the new Silicon Valley startups spent on average of $80,000 alone on legal advice. Good legal advice may be a bit expensive, but making a legal mistake can cost way more in court fees and could very well put your company in bankruptcy.
Starting a new business can be quite the exciting adventure. Many founders in the beginning stages of their company’s growth, go to bootstrapping. Don’t just rely on that, spend money on where it matters. These expenses are well worth the investment.
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