Creating the perfect budget for your company isn’t easy. You’ve heard that “a penny saved is a penny earned,” but also that you have to “spend money to make money”—at a certain point, you have to wonder: which is it?
Finding financial balance is tricky. If you’re looking to figure out where (and where not) to spend your hard-earned profits, read on for four areas where you can save or splurge for your business!
#1 Marketing: Splurge
Have you heard this famous saying from Henry Ford?
Stopping your advertising to save money is like stopping your watch to save time.
The automobile mogul was right at the turn of the century, and he’s right in 2020! Skimping on advertising may save money in the moment, but it also prevents future profits. If consumers don’t know about your business, they have no way of giving you their money.
Whether you’re focused on social media marketing, television advertisements, or old-fashioned print media, the vehicle (no pun intended) doesn’t matter. Marketing is always a good investment.
The bottom line: Put your money where people can see it and splurge on advertisements. Getting your brand out there is never a waste of funds!
#2 Business Lunches: Save
Everyone loves a good business lunch—everyone except your accountant.
While discussing business matters over a juicy burger can be more enjoyable, it’s possible to get the same results from a meeting in your conference room. This is especially true for smaller companies who are just starting to make a profit. Focus on budgeting and don’t go overboard with the culinary costs.
The bottom line: Professional meals are tasty, but try to keep your company’s food expenses under 10% of your total income.
#3 Vetting Potential Employees: Splurge
If you don’t want a violent criminal as your head of HR, avoid cutting corners on background checks.
Pre-employment background checks for employees can increase the cost of your hiring process, but it’s definitely worth the money. A detailed report on potential hires can provide important information, including:
- Criminal records
- Credit inquiries
- Validity of identity
The bottom line: When it comes to the safety of your other employees, money should be a secondary concern. Splurge on the background check and thank yourself later.
#4 Rent: Save
There are two things you can count on every month: flipping the calendar to a fresh page and rent being due.
Whether your business lives in an office or a storefront, you’re probably paying a pretty penny in rent and utilities for the space. With COVID-19 sparking the switch to remote work and online shopping, now is the perfect time to ditch these monthly expenses and go digital.
Set up a work-from-home system to keep employees connected from anywhere in the world. If you’re selling a product or service, invest in a high-quality website rather than a flashy window display to get more bang for your buck. Though it’s unclear when life will return to normal, it’s safe to say that e-commerce isn’t going anywhere in the near future.
The bottom line: Remote work and online businesses can save a lot of money on rent and utility bills. Embrace the modern market by switching to a virtual platform!
Invest in Yourself
Knowing where to save and splurge in your business takes a little practice—but the main guideline to follow is this: invest in yourself.
If you’re contemplating a pricey expense, ask yourself how it can benefit the company. If a little spending now can result in a lot of profit later, then it’s probably worth splurging. On the other hand, if an unnecessary cost lacks earning potential, you might want to skip it.
A little common sense and intuition can go a long way when budgeting. Always remember to trust your gut (unless it’s telling you to buy a ribeye steak during a business lunch)!