If you’re in the early stages of starting a small business, it can be overwhelming to figure out where to invest your limited cash and resources.
Most people make the mistake of focusing too much on revenue metrics their first year in business. I’m here to tell you that it’s more important to be more mindful of business spending as it’s one of the biggest determining factors for success.
Your first year and business can be challenging because you’re often wearing many hats that take you in different directions. It’s hard to discern between what is necessary, what will get you traction or save time, and what’s overkill.
To cut through some of the noise, here are some tips I’ve learned being a business owner for five years, myself, and coaching others through starting successful businesses.
For the full-length discussion on the Corporate Hostage, No More! Podcast click here.
Here are the things to avoid spending money on in your first year.
Marketing
You’ll need to set up a basic website, maybe even get business cards. But you should not spend big bucks on marketing your first year. For many new business owners, agonizing over your website will take up hours, days and weeks of your time. Don’t let perfectionist tendencies get the best of you here.
In almost all businesses, the first clients/customers you will get come from existing relationships or those that you build one-on-one. Give yourself a break from stressing over your website, it’s easy to experiment and make changes.
Here’s a tip: You probably won’t get your first clients or customers from your website or an online ad placement. This is especially true for service-based businesses.
If your strategy is to spend a bunch of money on ads in your first year, you’ll probably wind up being very disappointed. Your time is far better spent talking to people, networking with those you know and asking to be introduced to other people. You don’t even have to approach it in a “salesy” way. You simply need to talk to people about what you’re doing and why it’s important. You will get traction this way. And for the most part, it’s free!
Earned media, i.e. being featured in articles or websites is also typically free. Efforts spent on this kind of marketing won’t typically result in 1 to 1 conversions to clients. However, it does typically build “credibility” amongst potential clients/customers.
SEO or SEO Consulting
The number one spam email or phone call you will get once you start your business and put up a website is from SEO strategy/consulting companies. This is a big waste of money in your first years of business. These providers can be scammy unless you know what areas of SEO you want to focus on. The challenge is that even if you shell out money for web development instead of building a basic website yourself you can’t trust your website designer to check all these boxes and you also can’t trust your content management system (CMS) (whether Weebly, Wix, WordPress, or Squarespace) to automatically set these things up either, even if they claim to be “SEO-friendly” or take care of SEO for you. The good news is you can double check this yourself and it’s not that hard. It is necessary to do something about SEO because if Google doesn’t know who you are, where you are, what you do, or whether to crawl your site, you won’t rank high on any searches.
You don’t have to pay thousands for what you can set up for free!
- Make sure you have a simple, one sentence statement saying who you are and what you do on your homepage. Seems basic but I can’t tell you how many businesses, large and small, forget this important step. They typically just say their company name but it’s not necessarily in conjunction with what they do in the same sentence. It’s easy to make the mistake if you’re not intentional.
Here’s a tip: Formulate the sentence this way, “<insert company name> is a <fill in the blank> company <located in> that specializes in <fill in the blank>.” Best if this is “above the fold” (near the top of your website).
- Index your site on Google for free. This is so that google knows you’re a business and can start understanding who you are and what you do. That sentence saying who you are and what you do on your homepage? Google is going to start using that to verify you both on your site and on outside sites, building up confidence and credibility that you are who you say you are. When you update your site with new content (blog post, etc.) google will typically “re-crawl” your site to reflect the new information and send a message that you’re still in business and doing what you do.
- Take the time to set up a free “google my business” page. You will need a real location for your company to set this up so you can specify the areas you serve. It works best if you don’t use a UPS store mailbox or something similar—some businesses have been denied using these types of massively shared addresses. Co-working spaces are typically ok though.
If you have only a home address, you will need to report it to google so that you can receive your verification code in the mail. However, you can usually set up an area of focus rather than needing to pinpoint your home address on a map. Setting this up will also allow you to view statistics on how many people are searching on google to find you and what keywords you are using.
You will also have the ability to experiment with “Google posts.” These are visual posts that searchers see when they come to find you on google or google maps. Yes, we all know that we live in a digital world and ideally want clients from all over, but it’s good to have a home base especially in your first years as you’re trying to build your business. - Finally, you must be diligent in posting on your site any specific link on the internet where you or your company is mentioned. Commonly this is an “As seen on” or “As featured in” area of your site. These could be places where people typically search for the product/service you offer or these could be news articles or other types of sites where you’ve been featured.
Make sure you’re linking to the exact page you are featured in, not the generic site like Forbes.com, but the actual link where your profile or article is located. It’s also a good idea (and hopefully this will happen automatically) to encourage organizations or news sources to link to your website when mentioning you.
This 1-2 punch will not only help verify to google that you are who you say you are, but tell google that you’re a valid and sought after information source. This is known as “backlinks” in SEO speak. In time, your website will rank higher in searches related to the types of keywords you are associated with.
I can tell you these basic free steps make a big difference, especially in your first years.
Staff
Hiring too fast in your first year is another potential mistake. This is highly dependent upon your industry/profession, but you should give each hire serious thought to make sure that there will be an adequate ROI. Instead, start making a list of things you eventually want to outsource in your business because it saves you time or because it’s something you don’t enjoy doing. Often, you can experiment with new hires by bringing on consultants or contractors on a part-time basis to see how it works out and make sure that it will be good for your overall business.
Administrative tasks can often be automated without the need to hire anyone at all. I’ll share more about these two suggestions below.
These are some things you should spend money on your first year in business.
Automation
Automation of tasks no longer requires coding skills. These days you can draft and then send emails at a later/time date. You can use calendar software (such as Acuity, Calendly, etc,) so that you limit email back and forth when scheduling meetings. Task automation and integration tools such Zapier and IFTTT allow you to set up connections between different apps, so actions can take place in the background without you needing to do a repetitive task. If something happens in one app, it can trigger a different action in another app. I use these kinds of automation to set up links between email and notes, CRM and calendar, auto draft emails, and set follow-up reminders. What you can do with these tools and the number of integrations is almost endless. Automating / outsourcing repetitive tasks is a huge time saver.
The learning curve for these systems is fairly low, but there are contractors out there who specialize in setting up these sorts of systems for you. The way I know when I need to set up a new “zap” is if I’m repeating a task multiple times a week. I typically spend less than half an hour setting up a zap and then it saves me that time weekly forever.
Contractors
I’ve already talked about the need to keep things lean in your first year. Project-based or part time contractors are a great way to get work done. Typical roles that make good contractors are roles that have deep specialization and where they might be doing the work for multiple companies, including yours. Administrative Assistants, Bookkeepers, CPAs, designers, copywriters and content creators, and Financial Advisors are all examples of “staff” that could be hired on as contractors.
Financial Planning
Many businesses find that a CPA or bookkeeper is the first contractor to bring on. But after that, getting a good financial advisor to help you navigate your new entrepreneurial life makes a lot of sense. Things a financial advisor will do that a CPA won’t do are:
- An in-depth analysis of cash flow scenarios for the year,
- Thinking through how much you should save for retirement,
- Provide information on replacing benefits (health insurance, life insurance, disability insurance, etc.) from your corporate job,
- Looking at how much to pay yourself so that your personal needs are taken care of,
- Evaluating longer-term business growth scenarios and what that might mean for your business and personal finances
- Help you think through personal and professional financial goals and milestones
Here’s a tip: Hire contractors and financial planners that own their own business instead of going with big, corporate firms. The professionals you work with will “get it,” and have better guidance for you since they too live the self-employment life.
What’s the most surprising thing you decided to pay money for in your first year of business? Was it worth it?
