We’ve all heard it a million times: we need to be spending money to make money. But as fun as it can be to “charge it to the business account,” write-offs aren’t free. Make the right investments at the right time, however, and you’ll be feeding your business just what it needs to grow.
Ask yourself these three questions before you plunk down your hard-earned cash.
How is this expense going to improve my business?
Okay, yes, this may seem super obvious, but stop for a minute to think through how this purchase will be valuable to your business.
Let’s say you want to buy an online course about growing your business through Instagram, and it costs $399. Training is a great investment, but you’re going to need to bring in a minimum of $800 directly through Instagram to account for that expense—not including the time you spend to learn/apply it. Do your current sales lead you do believe that’s possible with a little guidance? Great! Keep yourself honest by putting a goal in writing before you buy.
Not every expense needs to correlate directly to income, but it should lead you down the path to higher sales. Will a super cute planner notebook make you more organized? Maybe! Bonus points if saves you time and helps you serve your clients better.
How does this purchase help me in closing more customers?
Marketing and sales are essential to your small business’s success. Understanding how each expense plays a part in your revenue is crucial.
Your business needs to make money, so your costs need to be in line with your revenue in order to be sustainable. Resist the new shiny thing, and keep your expenses in scale with your income.
If you have a couple dozen prospects in your funnel, you’re likely not ready to invest in a comprehensive CRM. Perhaps a simple spreadsheet will do.
Do I have the money to spend?
Know how much money you have, even if you have to peek at your profit and loss statement through your fingers. A general rule is to keep ALL of your expenses—including your own paycheck—at about 50% of your total revenue. This gives you room to save for taxes and withstand any lulls in business.
Time is money too. Those four hours you spent writing a blog article hoping that it will lead to more sales? Four hours you didn’t invoice for. Do you have the time to spend? Is there anything you can outsource to save time and money?
Spending money to make money
Go deeper into budgeting for your business. Join the waitlist for our Business Plan Pathway—a four-week program that will help you zero in a workable budget with help from our community of experts who’ve been there, done that, and put money in the bank.