This month our blogs are focusing on business cashflow and spend. Cutting costs is one of the quickest ways to improve your profitability. However there are expenses that are worthwhile, those that will help you to improve and grow your business, the trick is trying to identify those that will assist you add value to your business in the long run and those that are just an unnecessary cost.
Being a business owner is often about getting the most value out of your resources. That means spending only on the necessities, and nothing more. Unfortunately, things you consider to be a waste of your capital may actually be what your business needs to survive. Some of them are expensive, especially for a new company, but they’re worthwhile. Below we have identified some expenses that can actually help you improve your profitability.
1. Data Analysis
Successful business owners are usually well informed. They don’t make decisions solely on gut feeling – if they can be informed, they’ll be informed. You must have that same attitude, but attitude alone won’t tell you how your products are performing on a quantifiable level. You’ll need to spend on data analytics.
That means hiring the right people who can translate the data for you, if you can’t process it yourself. It may mean buying data analytics software to make the entire process efficient. These won’t be cheap, but it’ll give you the information you need to make smart decisions and ultimately maximize your chances of success.
2. Financial and Legal Advisors
Chances are that your start-up isn’t in the legal or financial industries and that your core expertise doesn’t lie in those arenas. That means having to pay for financial and legal advisors to make sure all your books are in order and that you’re not forgetting any tax laws. These advisors will likely be tax lawyers or accountants, depending on who you have on staff already.
Even if you’re in those industries, you should still hire advisors. This will let you focus your efforts on actually running the start-up instead of worrying about paperwork or whether your taxes are filed correctly. This is worth your money because it won’t matter how successful you are if you don’t have a competent patent lawyer protecting your money, or if your taxes aren’t filed properly and you end up having to paying fines.
3. Customer Service Representatives
Business owners and their employees are expected to wear many hats. Your responsibilities will inevitably involve some form of customer service. Problem can occur if you and your staff are not trained to deal with this work, or if you just don’t have the time to deal with it. Dealing with angry customers, for example, requires someone with the right mindset and the right training. Deal with them properly and they’ll likely stay your customers. Deal with them in the wrong manner and you’ll have someone telling people your company is not worth their time and money.
Spend money on customer service representatives. Make sure that your clients’ concerns are answered quickly and efficiently. This will improve customer satisfaction, which will result in customer loyalty and return business. If you really can’t afford it, at the very least you should make sure that your staff gets the proper training to handle customer service responsibilities.
4. Market Research
Great ideas are one thing – great products are another. Just because you have an idea, doesn’t mean that it’s marketable. People might not need or even want your product. Build a start-up on a product no one wants to spend on, and you may as well burn your money.
Market research isn’t just expensive, it’s time consuming. It’s also necessary. Market research will tell you and future investors all about the marketability and viability of your product. It’ll tell you whether you’ve got something special in your hands or if you’re going back to the drawing board.
5. Tech Support
Everyone’s got a little bit of technology in their lives, but only people who’re trained can actually make sure that they’re up and running. Hire technical support employees or have contractors you can call on to make sure that all of your tech needs are answered. You could learn to fix things yourself, but that’s not the best use of your time. The best use of your time involves your expertise as it relates to your product and your employees, not making sure that the router is plugged properly. Poorly performing tec will cost you in both time and missed opportunities, so make sure you are up and running an effectively and efficiently as possible.
Carefully controlling your business expenditure is important if you want to be successful, but make sure you don’t scrimp on the essentials, the things you need to drive your business forward. If you feel that your costs are out of control, or your cashflow is proving to be difficult, don’t despair there are lots of ways you can cut costs and improve your cashflow. Check out our free resources page for tools to help, or feel free to call us for a free no obligation review of your business, we can assist you get back on track.
Now is a great time to undertake a quick health check on your business. Why not complete our free online business improvement report. Answer some key questions about your business and receive a free report highlighting key areas for you to focus on and useful ideas to immediately improve your business performance. Access the business improvement report here.