~by Haley Lynn Gray~
When I started my business it was remarkably easy to spend money, and within a short time I had people contacting me daily to sell me things my business apparently needed.
They promised clients, visibility, and growth without legwork. Advertising on the side of pharmacy bags. IT support. Promotional items. Things I hadn’t thought of, which was genuinely impressive.
I bought a fair amount of it. Here’s what I learned.
The principle underneath the list
Almost every wasted purchase falls into one category: it made me feel like a business rather than getting me a customer.
That’s the test. Letterhead feels like being a real company. Branded pens feel like being a real company. Neither has ever caused anyone to hire anybody.
So before any spend: does this plausibly lead to a paying customer, or does it just make me look and feel established?
What I wasted money on
An expensive logo. I spent a good deal on one at the start. I still love it. It was money that would have done considerably more good elsewhere for a brand-new company.
Letterhead. I paid someone to design it because I thought we needed letterhead. We barely used it in three years.
Expensive business cards. Basic ones are fine. Nobody has ever declined to work with someone over card stock.
An expensive website. You can get something serviceable up quickly, or pay a modest amount for a simple landing page. A large website before you have customers is a large website nobody visits.
Promotional items. They’re nice. You don’t need them, however much it feels otherwise.
Directory advertising. We spent a substantial amount on phone book listings and got precisely nothing back.
A new computer. Unless yours is genuinely failing, it works.
Business-grade internet and a landline. If you’re working alone from home, ordinary service is fine, and a number that forwards to your mobile does the job at a fraction of the cost.
And an expensive CRM. This was the most annoying one. I paid a small fortune for software my employees hated and couldn’t use from day one. Total waste — and we were locked into paying for something nobody touched.
That last one generalises: don’t buy software before you understand your own process. A tool imposes someone else’s workflow, and if you don’t yet know yours, you’ll spend the contract fighting it.
One correction on advertising
I originally wrote that paid advertising does essentially nothing. That was true of what I’d tried — print, radio and untargeted local advertising, where the return was dreadful.
I’d be more precise now. Targeted digital advertising can work, and works well for some businesses. But it requires either real expertise or paying someone who has it, and the middle path — running it casually yourself while learning — is where budgets vanish.
And the rule holds regardless: don’t pay for attention until you know what happens to it. An ad pointing at a page that doesn’t convert is a donation.
What’s actually worth paying for
Getting the structure right. Incorporation and the legal setup, so you and your business are properly separated.
Insurance. Tempting to skimp on and the wrong place to do it.
An accountant — or at minimum proper bookkeeping software set up correctly and early. This saves time, money and tax, and retrofitting a year of muddled records is miserable.
A business bank account, including the fees. Keeping business and personal finances separate matters for both legal protection and tax.
Contracts. Depending on your business you need policies and properly written agreements. Good contracts make good business. They shouldn’t be so one-sided that nobody will sign them — but they do need to protect you.
The pattern in both lists
Everything on the second list is protection or infrastructure that’s painful to retrofit. Everything on the first is presentation.
Which is slightly backwards from how it feels. The appealing purchases are the visible ones — the logo, the site, the cards. The genuinely necessary ones are dull and invisible, and the people selling them aren’t ringing you.
Notice who’s calling. The pharmacy bag advertising found me. My accountant did not.
More on what to set up before you start and the more expensive mistakes I made.
About the author
Haley Lynn Gray is the founder of Leadership Girl, of In2itive Biz Solutions, and of the Women’s Entrepreneur Network — a community of more than 77,000 women in business.
She writes here about what happens when running a business starts demanding that you lead one. More about Haley →
