Entrepreneur
Whether you just launched your company or have been running it for years, making money last is always a challenge. There are so many tempting things that seem like they could help promote your brand or take your business to the next level. But the truth is, not every expense actually brings a return on the investment.
I have seen a lot of businesses accidentally waste funds on ideas that look good on the surface but don’t really do much for profits or growth. Then down the road, they wish they had that money back for when it was really needed. That’s why I wanted to share my thoughts on some common business expenses that you may want to reconsider or tweak before you add them to your budget.
Related: 10 Essential Startup Expenses, and 10 You Should Avoid
1. Expensive office decor and furniture
When first setting up a new office, it can be tempting to go all out and buy expensive furniture and decorations to make the office look great. While having a nice workspace is important, spending a ton of money on decor when you’re first starting out probably isn’t a good idea. Funky rugs, expensive art on the walls and super comfy lounge chairs in the break room sound nice, but they won’t directly help your business make money. It’s usually better to get basic, affordable furniture and spend money on things that will attract customers or clients instead. You can always upgrade the office look later when you have more money coming in.
2. Lavish company parties
Throwing big, fancy company parties can be a fun way to boost morale, but they can also be a major business expense if not done carefully. Before planning a blowout holiday bash or summer cookout, think about whether the cost is really worth it versus other ways you could spend the money. Consider hosting lower-key, affordable events instead of going all out at expensive venues and catering top-shelf food and drinks. Employee appreciation is great, but focus on building the business first before splurging too much on parties.
3. Unnecessary office space
Renting more office space than your business truly needs is wasting money that could be better spent elsewhere. If your company is still small with just a few employees working remotely most of the time or in a shared co-working space, you may not need a huge private office yet. Only expand your physical workspace as your employee count and on-site needs grow. Consider if a smaller, less expensive space could still meet your short-term needs to avoid overpaying for space sitting empty much of the time. Location can also affect rent prices, so evaluate if an equally good but less pricey area could work for you as well.
4. Overpaying for services
When first starting out, it’s easy to overpay for services since you likely have little negotiating experience yet. Make sure to get multiple quotes for services like website development, graphic design, legal help and more so you don’t get charged way more than necessary. Ask other local business owners for recommendations of reasonably priced service providers too. Additionally, confirm that your service providers will clearly outline the costs upfront so you aren’t shocked by unexpected extra fees later on.
Related: 8 Unconventional Ways to Cut Costs in Your Business
5. Unnecessary business insurance coverage
While proper insurance is important, not all types of policies are absolutely necessary for every business. Evaluate your specific risks and needs before just signing up for every coverage type an agent suggests. For example, you may not require international business travel insurance if you have no overseas plans yet. Confirm you only insure assets you truly own — like not paying to cover leased equipment you will return. Always shop around quotes too to avoid overpaying due to lack of knowledge. Note that understanding your insurance basics will help avoid wasting funds on unnecessary policies.
6. Expensive conferences
The chance to network sounds exciting, but understand that industry events require plane tickets, hotels, food expenses and time away from running the core business. Ensure any conference truly aligns with specific goals like making three deals or more. If your attendance won’t directly lead to quantifiable results, the major investment may not be worth it starting out. Consider cheaper local meetups first.
7. Business gifts and swag
Customized mugs, pens, luggage tags and other branded swag sure can look nice, but they may not directly improve your sales or service enough to justify the often hefty upfront costs. Consider lower-cost or digital-only alternatives like email signatures and social graphics when possible. You can, either way, spend your gift and swag money on proven marketing tactics or employee bonuses instead if your goal is pure business growth versus brand exposure. Quality clients will care more about your work than free tchotchkes.
Related: The 8 Most Common Areas of Overspending in Business
8. Wasteful office supplies
It’s easy to over-order basic office supplies in a quest for organizational perfection, especially at the start. But supplies have storage and expiration costs, so only buy what you will reasonably use within about six months to avoid waste. This goes for snacks and beverages, too. Also, take inventory before repurchasing to avoid duplicates sitting around unused. Remember you can always do smaller, more frequent supply orders as needed to cut back on excess. And don’t forget to look for lower-priced bulk or wholesale suppliers, which is better than always relying on major brands.
Hope this gives you all something to think about next time an inviting expense comes your way. Entrepreneurship is all about being scrappy — so get creative allocating funds strategically to where they’ll have the highest ROI for your unique goals first.
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