Business

These Start-up Costs are Worth the Investment

It is no secret that a start-up is a huge investment of both time and money. But some costs are just worth more than others. No, not cost more than others (there’s plenty of those), but worth more. Meaning, these expenses are going to pay off in the long run or they are going to pay off in different ways that might even be intangible.

If you are considering branching off on your own, the chances are you are already considering expenses like insurance, permits, licenses, and equipment. But shifting your focus to include less obvious options will help your business reach new heights.

To find out what costs you might be overlooking or writing off as superfluous, we reached out to industry leaders to hear what start-up costs they consider to be worthy of your investment.

Software

Strong data analytics software is your best weapon for making improvements to your business, so you need to make sure you have the technology to run A/B tests and other types of important analytics that will help to inform business decisions.

“Having smart, reliable software from the jump cannot be overlooked,” says Patricio Paucar, Co-founder and Chief Customer Officer at Navi. “If you are doing business in this century, you need to be able to stay ahead of the competition with your software. If you don’t put yourself in a good position to start, you are going to quickly be playing catch up with those who did.”

Analytic software will help you to understand what is working and what isn’t which in turn will help you make changes when current workflows have hit a standstill. This includes analyzing numbers from different sources and using them to create an educated viewpoint. “Nothing works better than just improving your product,” says Joel Spolsky, Co-Founder of Stack Overflow. Spending money on robust analytics from the start will help you in the long run.

Analytic software is not the only software that you should be investing in, adds Jason Boehle, CEO of QuaGrowth. “You should also be spending money on the best business software you can find to ensure success. This includes communication software, marketing software, management software, sales software especially. Don’t try to cut corners on these. Instead, invest in the ones that will work best for you and meet your needs. If you go cheap and invest in software that doesn’t do what you need it to, what’s the point?”

Make sure you take the time to understand your business needs and match them to the software at your disposal. Keep in mind, software companies will often provide you with generous trial periods before you need to make a buying decision, so shop around to see what is best for you and your business before going all in on a purchase decision.

Legal Needs

Ah, the lawman. Not someone that you want to deal with, right? Lawyers are expensive and a long, drawn-out lawsuit can put you out of business faster than you can say “Your Honor”. That being said, Heather Pulier, CEO of Outset Financial, says you shouldn’t cut costs when it comes to good legal advice. “You need to find a lawyer who has a specialty that fits your type of business. They might not be cheap, but they are essential. And good legal advice is hard to put a price on.”

Some new startups in Silicon Valley spend on average $80,000 on legal advice a year on legal advice and that number has only gone up in recent years. Finding a lawyer that is specific to your type of business and will help advise you on how to make sure your business is legally sound is crucial and worth the potentially high upfront. Leave guys like Saul Goodman for the other guys. You want a professional.

Finances

Unless you are some sort of financial wizard, you need to have a good financial advisor in place to help you navigate the costs of running a business. “Pay someone who knows what they are doing to make sure you are getting sound financial advice,” says Brandon Adcock, Co-Founder and CEO of Nugenix. If your company is providing financial advice, you can probably do this in-house, but on the high chance it doesn’t, financial advice will save you a lot of money in the long term.

“Tax attorneys and accountants will help you to understand what you need to do to make sure you have enough liquidity to cover your business costs,” Adcock added. “These professionals will make life a lot easier.” Have them help you create your long and short-term financial plans and secure funding from new investors while making sure your seed money is paid off on the proper timeline. Letting your debt pile up will sink your business.

Accounting

On the topic of money, you don’t want to be caught off guard when the government comes knocking in the new year. “Business taxes are quite a bit different than private taxes,” cautions Katie Lyon, Co-founder of Allegiance Flag Supply. “In the high chance that this is your first business venture, you don’t want to wing it come tax season and get hit with an audit.”

It is difficult to make sure your taxes are correct and done on time. Business taxes are even worse. Avoid spending too much and not deducting enough, shop around and invest in a good business accountant. They will charge a fee of course, but some things are just better off done by someone else if only to avoid the potential headache.

Customer Service

Jeff Bezos, Founder & CEO of Amazon.com, attributes a large portion of the company’s success to its dedication to customer service. “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”

If you have ever made the wrong order on the site, you know that they truly have invested in providing customers with efficient customer services. You should take a hint from this wildly successful company and do the same. “Customer service is one of the biggest factors in your company’s success,” says Michael Ayjian, Co-Founder & Executive Producer at 7 Wonders Cinema. “You will see an increase in customer loyalty, an increase in lifetime value from each customer, and a decrease in churn.”

Invest in the customer service section of your business to reap benefits.

Research

“If there isn’t a need for your service or product or an opening in the market for it, you are essentially throwing your money away,” advises Mehdi Marrakchi, CEO of Mob Hookah. “Investing both time and money in proper market research will save you from investing into something that has no target audience.”

Market research is tedious and can seem wasteful when you are trying to get your business off the ground but without it, you will be selling to no one, and that is a recipe for disaster.

Technical Needs

Technology is scary to a lot of people of a certain age. If it isn’t your cup of tea, you might be better served to invest in hiring people who can manage your tech for you. Daniel Tejada, Co-Founder of Straight Up Growth. “The time you spend trying to figure out tech could be spent on a myriad of other important things that need your attention as the company leader. Let someone else build your website and maintain your servers.”

Allowing yourself to not worry about how your tech is functioning is peace of mind that is hard to quantify. So invest and forget.

Ethan

Ethan is the founder, owner, and CEO of EntrepreneursBreak, a leading online resource for entrepreneurs and small business owners. With over a decade of experience in business and entrepreneurship, Ethan is passionate about helping others achieve their goals and reach their full potential.

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