4 Areas Where New Business Owners Shouldn’t Be Spending Money
I was recently in Austin for a speaking gig and ended up having coffee with a friend and colleague who lives in the area. During our coffee chat, she let me know what’s really going on in this online business world. More specifically, she told me how new business owners are spending their hard earned money on things that will not be giving them a return on their investments.
When I asked her how she knew this, she very candidly explained how she fell into the same trap many new business owners fall into: trying to look the part but not actually being the part. She was also very candid in letting me know how one of her business coaches was giving new business owners terrible advice about where they should spend their money.
Upon hearing these things, I was infuriated. I could only imagine how many new business owners were out there wasting their money and getting into debt over things like photo shoots and logo design. I was so upset by this that I ended up doing a livestream in my Facebook group to discuss the topic.
I also wasn’t entirely surprised. All you have to do is scroll through your Facebook feed and you’ll see ads from coaches promising six-figure dreams for new business owners. They all have the same outfit, the same photos and the same ad copy.
With that being said, here are four areas where new business owners definitely shouldn’t be spending their money.
$3,000 Photo Shoots
Much to my shock and awe, I found out new business owners are being advised to spend thousands of dollars on photo shoots so they have great Instagram photos.
The photo shoot isn’t really the problem here. In fact, kudos to the photographers for banking that much money.
The problem is that often times new business owners have no idea how they are going to make their money back. They are, essentially, spending money to look the part when it’s actually much easier and profitable to just go get a client by offering a valuable service or product.
Often times they also have no idea how these photos play into their marketing message because they haven’t yet done their homework in terms of market research and social media copy.
Most of all, it’s really just an example of putting the cart before the horse. There’s a big difference between “looking” the part and actually “being” the part.
A Website Worth Thousands Of Dollars
Just like new business owners probably shouldn’t be spending thousands of dollars on a photo shoot when they don’t understand how they are going to make the money back, they also probably shouldn’t be spending thousands of dollars on a website.
This is especially true when hosting is dirt cheap and they can get a WordPress theme for less than $100 when they are first starting.
First of all, unless you have investors or took out a loan, you probably don’t have thousands of dollars to spend on design. Second, it’s absolutely useless to spend that kind of money if you don’t yet understand how your website plays a role in your overall sales and marketing strategy.
Don’t get me wrong, I’ve certainly dropped a pretty penny for design. But it wasn’t until after I’d spent a year doing market research and really learning how it all worked together. Once I had that information I knew how to direct my designer and I knew how I was going to see the return on my investment.
Facebook Ads Before You Have Something to Sell
Are Facebook ads effective? Yes. Are they cheap? If you work it right, yes.
Here’s the problem though: most new business owners don’t yet know how Facebook ads fit into their strategy.
I actually wasted a lot of money on ads simply because a) I thought I needed to when my business wasn’t ready for them yet and b) I had no idea what I was doing or what the end goal was.
Once you know what the end goal is, you need to work backward. Like everything else I’ve mentioned in this article, Facebook ads are just one part of the marketing process and if you don’t yet have the information of the funds you need to run them, then you probably shouldn’t waste your money.
Expensive Software You Aren’t Ready For Yet
Should new business owners invest in tools that will help them better run their businesses? Absolutely.
However, that doesn’t mean go buy the most expensive and complicated software on the market. Often times when you’re first starting out you neither have the budget or the need for expensive software.
Besides, there are plenty of less expensive options that are much easier to use until your business gets to a point where you do need to upgrade.
For instance, I slowly upgraded into an all-in-one email marketing and CRM system. I was in the game for years before I did this. When I finally upgraded it was because I had the funds and the need. I also understood how this software was going to help me earn more money as a result of using it.
And even still, it’s been a couple of years and I’m sure my team and I aren’t even using this software to it’s full capacity. We’re still always learning about new ways to use it to automate system processes and increase sales.
The same is true of my new webinar software. I actually made the mistake of purchasing this software – which costs a few hundred dollars a year – before I actually had a need for it a few years ago. That was $400 for something I used once and maybe made $100 bucks off of. In other words, I was out $300.
Fast forward a couple of years and now I actually do have a need for it. Furthermore, now I understand how to actually use it. I also know where to cut in my business (found cheaper insurance and web hosting) so that I don’t actually end up spending more money.
New business owners should avoid the costly mistake that causes so many businesses to fail: spending too much money on stuff they don’t actually need. Don’t fall for the gimmicks and instead focus on cost and ROI.