Entrepreneurs waste money in so many ways, but this doesn’t mean you should.
Money doesn’t grow on trees. If it did, you could enjoy the luxury of spending what you wanted when you wanted.
As we live in the real world (sadly), we have to budget ourselves and spend what we have wisely. This is especially true in business. When first starting out on a self-employed basis, there are things you need for your business, and things you don’t. As a startup entrepreneur, learn how other entrepreneurs waste money so you don’t do the same.
Wasteful Spending #1: Renting an expensive office space
In a bid to look professional, many startup entrepreneurs invest in expensive office space. It’s a place for their team to come to work, and an inviting space for clients to feel comfortable in doing business. On the one hand, this is fine, but it is a bit of a luxury.
When working on their own, it makes more sense for the entrepreneur to work from home. Team members can benefit from remote working, enjoying the advantages of cloud software from their own homes, and clients can be courted through Skype and other video communication software.
Wasteful Spending #2: Employing too many staff members
Despite their many skills, the entrepreneur won’t have the tools to take on board every task that is required when running a business. Therefore, the temptation to build a team will be strong.
However, there has to be a reason for employing each member of staff, and if there isn’t enough work for them to do, money will be wasted on their salaries. It makes more sense to hire temporary staff through payroll recruitment consultants. Or you might consider outsourcing certain tasks to other companies, especially when these jobs are temporary.
Wasteful Spending #3: Unnecessary office equipment
Stocking an office space with the latest tools and equipment is fine. But only if you’re going to use those items.
It’s a wasteful expense buying the best technology when it’s going to sit in the corner of the office gathering dust. As a startup, it’s wise to only purchase equipment that is going to be used on a daily basis.
You might even consider buying it secondhand too. Second-hand tech is fine so long as it works. Only when the money starts rolling in should the entrepreneur think about replacing them with something more up-to-date.
Wasteful Spending #4: Expensive marketing campaigns
When a startup begins, it’s sensible to spread news about the business from the rooftops.
Marketing is key, but when finances are low, it’s important to find ways to market the business cheaply. Spending money on marketing that can’t easily be measured or to target the wrong demographics is a waste of both money and time.
Wasteful Spending #5: Poor accounting
Money is wasted on a daily basis through poor accounting. Invariably, this has an impact on every other item on this short list.
Everything needs to be accounted for, from the cost of a paperclip to the expense of computer equipment. By not budgeting properly, money will be wasted on a daily basis, and financial troubles will prevail. A wise entrepreneur will hire an accountant to help them make the right financial decisions and to balance the books each month. Alternatively, you can use one of the many accounting apps to help you keep tabs of where your money is going.
When starting out in business, purse strings need to be tightened until those all-important profits start filtering in. If any of the above applies to your situation, take control of your spending and use your money wisely.