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You’ve almost certainly heard the saying “you need to spend money in order to make money” at some point in your life, and there’s a reason why it’s had such staying power in the business world. It’s simply true.
Every startup business will require a certain financial investment — hence the niche filled by venture capitalists. Stock needs to be obtained; manufacturers need to be paid, office space needs to be rented, and more. Even in the case of jobs like affiliate marketing, a certain amount of money will need to be spent on web hosting, website design, and so on.
But there is a line that shouldn’t be crossed in business. You need to spend some money to make money, but that money needs to be spent in a judicious and focused way, and this axiom is by no means an excuse for general wasteful spending.
Here are some dos and don’ts of spending money to make money.
Do: buy essential tools for your business
There are going to be certain essential tools that you simply need in order to perform your work properly, and to the appropriate standard, and a major part of your job as an entrepreneur is identifying what these tools are and investing wisely in them.
If your job involves sending out packages of a precise weight, you will need some form of commercial scale and a digital scale indicator. You will not be able to perform your job properly without these things.
Don’t skimp on the things that are truly necessary for your job. There is a point at which you simply can’t do without buying a particular tool.
Do not: buy extravagant gadgets that add little in practice
While certain tools are essential for your ability to carry out your job properly, there will also, inevitably, be a large variety of fancy gadgets and extravagant tools that you’re tempted to buy, but that adds little benefit in practice.
To manage your money properly, you need to avoid impulsively buying shiny things just because they seem intriguing.
Don’t fool yourself into thinking that you need the latest and best of everything, all the time.
Do: invest in marketing
Marketing — the way you present yourself to customers in order to get them to use your services — is one of the cornerstones of every successful business.
You need a professional looking website to be taken seriously in just about any field imaginable.
You need a sophisticated system for reaching out to your prospects in order to bring them into the fold.
A significant chunk of your professional budget should be set aside for marketing purposes.
Do not: throw money at a problem to try and avoid work
Sometimes, you will find that there’s a problem with your business model and that things just don’t work out in quite the way that you might want them to.
Instead of committing to the hard work of investigating the issue and restructuring things as needed, it can be tempting to try and throw money at a problem instead, to try and solve it.
If, for example, you get a decent number of hits on your website, but few people make a purchase, you may be tempted to throw down a massive chunk of change on Adwords, to try and increase traffic to your site, and so, presumably, increase sales.
But this strategy is unlikely to work, and it certainly doesn’t address the root problem.
Avoiding throwing money at complex problems in order to try and avoid work.