Monday, February 11, 2013

3 Times You Should Spend Money: Being Cheap Today Might Cost You Tomorrow

As a marketer, I see this a lot, especially with small business owners.

Money is tight, anyway, but it usually is especially tight during the initial period when you open your business in that first year or two.

So it's really hard to make yourself spend any money, especially if you don't really have a lot of money to spend.

This can be a smart approach.  There are lots of ways to waste money.  As business owners, we want to reduce our costs as much as possible.

Cost vs. Investment

However, there are times when NOT spending money today costs us tomorrow.

These are called investments, and I'm not talking about the stock market or investing in real estate, although those MIGHT apply, that's not my focus here.

When is spending money an investment?

There are three (3) times it definitely makes sense to spend money, because it's an investment:
  1. You don't know how to do something.
  2. You know how to do it, but you are not efficient at it.
  3. You know how to do it, but it takes too much of your time.
If your situation falls into any of these categories, and you are NOT spending, then it is costing you to save; that's a bad decision.

1. You don't know how to do something.

Most often, this is the easiest time for a business owner to spend money.

If your business needs something, but you don't know how to do it.  You probably should pay someone to do it.

Maybe you can find someone to do it for you, but  that person probably will not guarantee the work.  Also, if that person has another client who pays and needs help at the same time you do, guess who will be getting help first.  It's probably not you!

My Example: My Logo: I had a vision of how I wanted to look, but I am not an artist.  I paid someone else to create that, and I get compliments on it nearly every day.  (That goofy grin is a perfect fit for my personality, too!)  If I tried to do this, that picture would look disastrous.

2. You know how to do it, but you are not efficient at it.

If you know how to do something, that means you can do it yourself, right?  Why not?  You don't have to pay anyone else for labor.  You can do things on your own terms, and you do things at your own preferred quality level.

However, here is an important question to ask yourself as a business owner...

Key Question: How LONG will it take you to do it?

Not only is MONEY a limited resource for our business, but so is TIME.  We only have so much time.

If our business needs something, how long will it be before our business can benefit from having (or even using) the finished product?

Not only can a professional perform their specific areas of expertise more quickly than most of us, they probably have the experience to understand what "quality" issues are real versus ones that are glaring to us but unnoticeable to our customers.

My Example: Videos: I can create simple videos, but the videos that I personally create are not very good quality, and they take me forever to create.  That is why I pay other people to make videos for me.  THOSE videos are really good, and these people do not take nearly as long to make videos as I do.

3. You know how to do it, but it takes too much of your time.

The most difficult time for most business owners to spend money is when they know how to do something--maybe even better than the person they hire to perform that task.

Why would it make sense to pay someone then?

Let's take, for example, the CEO of a company like Google.  That CEO is probably really capable of emptying trash cans.  That CEO could go to every desk in the company, empty the trash, and change the liners, and he (or she) might be really good at doing that.

Key Question: Is THAT the best use of this CEO's time?

Maybe, but probably not.  That CEO's time is probably much better spent making sure that his (or her) marketing team understands what is making current customers buy right now.  That CEO probably needs to make sure that the accounting team is watching the cash flow for the overall company and each department area.  This list could continue for a while.

As a business owner, if you are taking time doing one thing, you are taking away time from being able to do something else.

Figure how much you are worth each hour, and ask yourself how much you would pay someone else to do what you are doing now.

If you would pay someone else MORE, then it might be okay to do this yourself.

If you would pay someone else LESS, then it is probably costing you money (and time) to do this yourself.  Pay someone else to do it.

My Example:  SEO Blog Posts: I write very well, and I can put together some really good press releases, articles, blog posts, and sales pages.  However, writing is NOT easy for me to do.  I have writers who have an easier time writing things, and their time costs less than my time.  Each time I pay them to write something, I get reminded how smart I am to pay them.

Spending money could be an investment for you and your business if you approach it correctly.  Watch your costs, but do not keep yourself from investing in your company the way you should...just because it costs you money upfront.

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