{"id":2238,"date":"2015-02-23T13:56:48","date_gmt":"2015-02-23T18:56:48","guid":{"rendered":"https:\/\/leadershipshape.com\/wardroom\/?p=2238"},"modified":"2018-08-15T14:14:30","modified_gmt":"2018-08-15T18:14:30","slug":"2238-2","status":"publish","type":"post","link":"https:\/\/leadershipshape.com\/wardroom\/2238-2\/","title":{"rendered":"10 Essential Startup Expenses, and 10 You Should Avoid"},"content":{"rendered":"
\n
Sujan Patel<\/a><\/div>\n
VIP CONTRIBUTOR<\/div>\n
Entrepreneur and Marketer, Co-founder of Web Profits<\/div>\n<\/div>\n
<\/div>\n
February 23, 2015<\/div>\n
It\u2019s no secret that startups often fall into the trap of spending money on things that aren\u2019t that important — it\u2019s just one of the many mistakes<\/a> that entrepreneurs can make.<\/div>\n
However, the fact that some expenses are unnecessary doesn\u2019t mean that you need to be a cheapskate whenever you encounter a potential cost. In fact, some expenses are absolutely necessary, and as an entrepreneur, it\u2019s essential that you know the difference.<\/div>\n
Related:\u00a07 Common Strategies My Company Avoided That Helped Us Grow Tenfold in a Year<\/a><\/div>\n
Here\u2019s a list of 10 things that you absolutely must spend money on,\u00a0followed by 10\u00a0things you definitely shouldn\u2019t:<\/div>\n

10 essential expenses<\/h2>\n
1. A business plan. There\u2019s a lot of controversy regarding business plans, but in my opinion, knowing where you\u2019re going<\/a> and how you\u2019re going to get there isn\u2019t optional in business.<\/div>\n
2. Market research. Never spend money on production before you know that you have customers ready to buy. Knowing what your market needs and how you can meet that need is essential for success.<\/div>\n
3. A CFO or accountant. A good CFO or accountant can save you more money than you\u2019ll spend on him or her by holding you accountable for spending and helping you plan your investments and understand your return on investment.<\/div>\n
4. Buying lunch for those more important than you. An awesome life lesson<\/a> from the richest man in Asia, this tip is all about networking. The cost of a single lunch is worth far more.<\/div>\n
5. Legal advice. While unnecessary services cost you money you can\u2019t afford, nearly all startup entrepreneurs require some level of legal advice. Whether it\u2019s basic incorporation paperwork or understanding liability issues, pay for good advice from the start so that you aren\u2019t stuck with the big bills of legal settlements later on.<\/div>\n
6. Tax professionals. Doing your own taxes wastes countless hours that could be better spent on your business. Hire a tax professional, get the advice you need, and rest easy in April.<\/div>\n
7. Customer service. It\u2019s been said that sales without service is like putting money into a pocket with a hole in it. Customer service is an extremely profitable portion of your company, and it pays to invest in it.<\/div>\n
8.\u00a0Marketing and branding. Again, this business need can be done well and it can be done poorly. Don\u2019t waste money unnecessarily, but do spend wisely on targeted, measurable campaigns.<\/div>\n
9. Outsourced PR. This one is controversial as well, but keep in mind that I\u2019m advocating tailored spending on measurable results. Your time as a founder is too valuable to spend on activities that others can handle for you in a profitable way.<\/div>\n
10. Technical support. As a rule, the hours you\u2019d spend doing your own website and server maintenance would be far better spent serving your customers. Hire\u00a0technical support and put your time to better use elsewhere.<\/div>\n
Related:\u00a010 Tools for Smoothing the Startup Process<\/a><\/div>\n

10 expenses to avoid<\/h2>\n
1. Expensive subscription-based services. Many times, project management software and other subscriptions have cheaper or free alternatives. Use them until you\u2019re sure you need the features only a paid solution can provide.<\/div>\n
2. Expensive clothes. Don\u2019t let your ego put you out of business. It\u2019s important to look professional, but you can do so fairly cheaply if you\u2019re smart about how you shop.<\/div>\n
3. A fancy\u00a0office. Everyone wants a plush office, but the expenses involved in creating this business oasis can add up quickly. Focus on your business\u2019s success first — the office can wait.<\/div>\n
4. Expensive equipment. Like anybody, you may want to buy the latest and greatest technology, but that doesn\u2019t mean it\u2019s a useful business expense. Purchase only what you truly need, and do so as economically as possible.<\/div>\n
5. Staffing before you\u2019re ready. It\u2019s fun to be an employer and to watch your startup grow, but if your business isn\u2019t ready, you\u2019re just wasting money. Outsource first, and only bring on employees if it makes financial sense to do so.<\/div>\n
6. Extravagant business parties or trips. Again, these expenses may be fun, but they\u2019re not wise. This kind of spending in a young company isn\u2019t a sign of success — it\u2019s a sign of wastefulness.<\/div>\n
7. Non-measurable outreach efforts. Whether it\u2019s PR, marketing\u00a0or branding, if you can\u2019t measure the results of your efforts, you shouldn\u2019t spend the money. When money is tight, start by focusing your spending on things you know can build your business.<\/div>\n
8.\u00a0Buying followers, email marketing lists\u00a0or other \u201ccustomers.\u201d Not only is this usually a scam, it\u2019s not a great way to get customers. It may look good to say you have thousands of followers, but if they\u2019re fake, you\u2019re never going to see a return on that cost.<\/div>\n
9. Expensive shipping or printing costs. While having a logo and some inexpensive business cards makes sense, there\u2019s no reason for young companies to spend money on major printing or shipping expenses. Focus on meeting your customer needs first, and fancy stationery later.<\/div>\n
10.\u00a0Spending money before you\u2019re sure you\u2019ll make money. Unless you have some extremely generous investors in your back pocket, be especially cautious about spending significant amounts of money before you\u2019re making enough to cover it. Just as individuals should live within their means, so should your business.<\/div>\n
Every business is unique and will have different needs at different times, which is why having someone who will hold you accountable can be very helpful when it comes to making smart decisions. When you spend money on the things that are truly important, you position your business well for long-term success.<\/div>\n
What do you think are the best and worst expenses for startups? Share your thoughts in the comments section below!<\/div>\n
Related:\u00a0Who Needs an Office? How to Go 100 Percent Remote.<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

Sujan Patel VIP CONTRIBUTOR Entrepreneur and Marketer, Co-founder of Web Profits February 23, 2015 It\u2019s no secret that startups often fall into the trap of spending money on things that aren\u2019t that important — it\u2019s just one of the many mistakes that entrepreneurs can make. However, the fact that some expenses are unnecessary doesn\u2019t mean … Continue reading 10 Essential Startup Expenses, and 10 You Should Avoid<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6],"tags":[],"class_list":["post-2238","post","type-post","status-publish","format-standard","hentry","category-startups","pmpro-has-access"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4MGMb-A6","_links":{"self":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/2238","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/comments?post=2238"}],"version-history":[{"count":3,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/2238\/revisions"}],"predecessor-version":[{"id":2241,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/posts\/2238\/revisions\/2241"}],"wp:attachment":[{"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/media?parent=2238"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/categories?post=2238"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/leadershipshape.com\/wardroom\/wp-json\/wp\/v2\/tags?post=2238"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}