As a startup or a small business, it’s crucial that you spend your money correctly in order to have the best chances of growing your company so that it’s sustainable. Most businesses require a lot of care and money in order to grow correctly, but how you use your resources is just as important as having resources in the first place. The returns you’ll see on your business are going to depend heavily on how you budget and plan, which is why it’s important to get a hold of your financial situation.
However, almost every company will arrive at a crossroads where they need to decide how much value they’ll get out of a large expense. Whether it’s completely changing some of your work systems, hiring a new employee or signing an expensive deal with another company, it’s a good idea to ask yourself a couple of important questions before doing anything with your business that involves a lot of money and the potential for failure.
To give you some ideas, here are a few of those all-important questions you should be asking yourself.
1. Are there cheaper alternatives?
In a world of open-source software and cheap hardware from places like China, it’s incredibly easy to get your hands on a budget alternative of virtually anything. Manufacturers all over the world (but especially in China) are shaking up just about every industry in order to put themselves into the spotlight. Just take a look at the cheap smartphone offerings by companies such as OnePlus and Xiaomi and you’ll realize that you don’t need to spend much money on office equipment. If you want to go more in-depth, then you’ll also find that specialized industry equipment can be found for a much lower price if you’re willing to purchase second-hand or refurbished.
2. What does it do for my business?
You need to question your motives when it comes to purchasing equipment or anything expensive for your business. For example, if you’re operating a business that deals with engraving, then you might be tempted to get a machine from Boss Lasers or another reputable business. This is a fantastic idea because it allows you to be more productive–assuming you actually engrave jewellery or other materials on a regular basis. If you don’t, then you’re not going to find much use from a laser engraving machine. It can, however, open up an entirely new business model that you can take advantage of.
3. How long will it take to see a return?
Expensive equipment is great and all, but how long will it take for you to see a return? For instance, if you purchase some new machines or hire a new employee, how long will it take until they've integrated into your workplace? Have you calculated the return on investment and how long it will take? A good business will always invest in things that will give it a return in the future, hence why it’s important to plan ahead for any expensive purchase you make.