By Anna Johannson
There’s something to be said for being frugal and cutting unnecessary expenses out of your company’s budget. However, don’t let frugality become your downfall. There are a number of things your businesses should never cheap out on.
4 Places to Spend
Stop looking at spending as a negative and start viewing it as a necessary component of growth and profitability. Here are some things you should have no problem cutting a check for:
1. Good Website Hosting
Your website is essentially your brand’s storefront in the digital world. While good design is obviously important, it all starts with reliable website hosting. A good host will provide you with high uptime (99 percent and above), fast loading speeds, and good security.
You have to be careful because there are so many different website hosts in operation these days. Many will offer extremely low introductory offers, which can be enticing for startups or small companies that are strapped for cash. But just remember that you get what you pay for.
2. Legal Counsel
“One place where I see businesses go cheap on a regular basis is foregoing basic legal advice on issues that are critical to their business,” lawyer and entrepreneur Robert Klinck says. The danger is that, in failing to pay for good legal services, businesses are building their brands on faulty foundations. Everything may look fine on the surface, but there are major cracks underneath.
“Business lawyers can help with all kinds of important legal issues,” Klinck explains, “including helping you decide on a corporate structure, drafting management agreements, drafting shareholder/partnership agreements, drafting employment contracts for important employees, drafting confidentiality and non-disclosure agreements, and many more.”
3. Budgeting Software
It might seem strange that you should spend money to track your money, but that’s exactly what you need to do. The right budgeting software will keep your business expenses in line and help you understand how much you’re bringing in, where it’s going, and how you can better allocate your financial resources to maximize spending power.
Good budgeting software will have features that include budgeting and planning, financial forecasting, reporting, analytics, profitability modeling, and other similar features.
4. Top Talent
It’s amazing how many businesses cheap out on top talent and instead opt to pay inexperienced people less money to do the same job. This is a huge mistake that you can’t afford to make.
“Great employees are worth significantly more – to teams, to customers, and to the bottom line – than average or even above-average employees. Sometimes twice as much. Sometimes multiples more,” entrepreneur Jeff Haden says. “So forget scales and benchmarks. Truly top performers are rare. Pay your superstars not just as if you want to keep them… but as if you desperately need to keep them. Because you do.”
If you ever feel like you don’t have the financial resources to pay for top talent, review your budget and you’ll almost always find some wiggle room. Cut out some of the fluff that doesn’t matter and focus on the investments that do.
Financial Resources as a Tool
Money – as a tangible possession – has no worth. In other words, a dollar bill is just a piece of paper with printed designs. It’s what the dollar bill can do that makes it so valuable.
Instead of hoarding cash and putting a lock on your bank account, create a plan for strategic spending. While there are plenty of terrible ways to spend money, there are also a lot of smart things you can invest in. Make sure you understand the difference between these categories and use your money as a tool for cultivating growth.
Anna Johansson [email protected] is a freelance writer, researcher, and business consultant. A columnist for Entrepreneur.com, HuffingtonPost.com and more, Anna specializes in entrepreneurship, technology, and social media trends. Follow her on Twitter and LinkedIn.