Entrepreneurs have to work hard to secure the investment and financing they need to start their ventures. Startup budgets are inherently tight. Every dollar you spend in the wrong place is a dollar that could have been useful somewhere else. Because of this, it’s critical for entrepreneurs to carefully analyse what they’re spending their money on, and whether they’ll get the long term value they need from every purchase.

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Let’s take a closer look at a few things that startups definitely shouldn’t be blowing their budgets on…

Cookie cutter online marketing

A business isn’t much of anything if it doesn’t have customers. It’s completely justifiable to pour a lot of resources into getting your business’ name out and generating leads. Unfortunately, most entrepreneurs aren’t marketers themselves, and won’t go out of their way to employ a professional who can help them develop a personalised and comprehensive marketing strategy.

Instead, they’ll hire one of the many marketing companies that offer conveniently simple cookie cutter online marketing packages. Any marketing company that doesn’t want to consult with you about your business, your goals, and your target audience before offering possible solutions is a waste of money. Every business is unique, and marketing campaigns that don’t take your business’ specific needs into account are unlikely to yield results

Inexperienced workers in over their heads

Startups generally can’t afford to pay premium wages, and that often means hiring a lot of entry-level workers. While that might be a great idea for some positions, it can be a big mistake in other cases. People who are trying to acclimate to both your business and their profession at the same time are bound to make significant mistakes.

This is particularly bad for startups, because it will increase your client turnover rate, and contribute to establishing a negative reputation before you’ve even come out of the gate. Moreover, you’ll be forced to spend additional time and money in training these workers, which can interfere with the work of the person doing the training. Consequently, you’ll have to spend more on on sales and marketing, making the entire organisation less efficient.

You’ll need a core of reasonably seasoned and highly competent employees to ensure consistent quality, to build reliable and smooth procedures, and to help establish a healthy company culture. It’s worth it to start smaller if it means producing higher quality work, and building a great reputation right from the start.

Scaling issues

Entrepreneurs don’t go into business with small, measured dreams. Unfortunately, that often translates to overconfidence, and premature attempts to scale their business up. Startups who hire employees that they can’t put to work, buy equipment they don’t need, and rent office space they have no use for are wasting resources that could be spent on actually growing their business.

By investing in production capacity before finding ways to generate demand, businesses can actually impair their growth. It’s critical for any business on a limited budget to manage their growth strategically, so that every step is self-sustaining, and drives the entire venture forward.

Unnecessary and expensive software

CRM or ERP software are tools that are designed to allow businesses to more effectively collect, store, and analyse mass amounts of data. These tools are extremely useful for large enterprises that are juggling complex multifaceted projects for a large number of different clients in a large and complex organisation. Startups often purchase these in an attempt to emulate industry leaders, but this is nearly always a mistake.

Startups haven’t had time to grow to a large size, bring on a wide and varied customer base, or diversify their services into a large and complex system. Expensive software shouldn’t be necessary at this stage, and might even make life more difficult for a relatively small team.

Image and social status

Many entrepreneurs look up to and want to emulate highly successful startups that they know of by offering unique amenities to employees, setting up shop in a beautiful central location, and trying to associate their brand with the “startup culture” of Google, Uber, Facebook etc… What they don’t often consider is that many of those same businesses had relatively humble beginnings. Your business’ projected social status doesn’t mean much before you’ve even had time to develop a professional reputation based on your work.

By avoiding expenditures that only make your business look successful on the outside, entrepreneurs can ensure that they have more funds to deal with shortfalls and cash flow interruptions. This can help to build that all-important professional reputation.

Don’t let useless expenditures eat into your budget. Identifying and avoiding these problem items does more than just help to keep costs down. Carefully analysing them can help you define more clearly what you do need to invest in to ensure that your startup achieves that ultimate long-term success.