Here’s exactly what to consider before you shell out for your business.
As a business owner, it’s easy to feel like you’re dumping money into the void.
Starting a small business—and keeping it running successfully—means constantly deciding where to save and when to spend. As unexpected problems arise (ahem, every day), making financial choices can feel totally overwhelming.
There are so many things you could invest in for your small business—marketing tools, scheduling software, technology, equipment—and it’s difficult to figure out what will end up paying off in the end.
But investing in your small business is key to your success. It can take your business to new heights, growing your clientele, leveling up your services, and bringing in more money.
So, how do you know if an investment in your business is worth it?
Here are the three questions you should ask yourself before every purchase so you can make a financially sound decision—and see a payoff.
1. Will this product save me time?
You’ve certainly heard that time is money, and that’s especially true for service providers like you.
Small businesses like salons, spas, or fitness services rely on the human element as the product, and because you have a service-based business, your product is time. It’s critical that you maximize every hour in the day so you can bill for as much time as possible.
That’s why some investments make sense if they help you save a significant amount of time. This time can be freed up to take on more clients, and do more revenue-generating work.
To calculate if a timesaver is worth the investment, look at how much money you’re losing out on with time-consuming tasks.
Let’s say you’re a hairstylist, and there’s a new piece of equipment that will help you dry hair in less than two minutes. The machine costs $1,000. You calculate that on average, you usually spend eight minutes drying clients’ hair, and you typically take on 10 clients per day. So, if you purchased this piece of equipment, you’d save 60 minutes.
In that hour, you could take on an additional client each day. Say you projected that you could fill that extra time with another client three times per week, and you could make $100 per additional client. That’s an additional $300 per week, and in less than a month you will have paid for the machine with the extra revenue from your extra time.
5 Apps That Save You Time
- Schedulicity. We can’t avoid mentioning our favorite scheduling software—us! Online scheduling apps / appointment schedulers like Schedulicity save you tons of time by making the appointment scheduling process completely seamless and automated. Say goodbye to wasting valuable time on the phone making appointments and let us handle it for you.
- IFTTT. This juggernaut of an app links actions together to save you time. Some examples: If the weather report says high heat, send me a text reminding me to pack a water bottle. If my mom calls, add a reminder to my calendar to call her back. If I have an early meeting, set my alarm 30 minutes earlier than usual.
- TripIt. If you’ve ever sunk hours into planning a business trip and trying to keep all of your travel information straight, TripIt is the answer. The app organizes everything from flight info to dinner reservations into one simple itinerary.
- Feedly. Do you spend all morning skipping around the internet to read the latest news and stories about your industry? Feedly puts everything in one place, so the information is right in front of you—and you don’t have to waste time searching.
- Instacart. Stocking up on breakroom snacks or appetizers for a client workshop? Never languish in a grocery store line again. Instacart will shop your list for you and deliver your groceries straight to your door.
2. Will the product save me money?
Investing in your small business is a smart move if the investment will save you money—especially when you take into account how quickly you’ll make back your investment.
Consider where you’re spending your money. Do you pay a premium for repairing a beat-up piece of equipment a few times a year? You might be spending more over time than you would if you just replaced the old item.
Are you paying massive credit card processing fees? It’s probably time to look at an integrated payment system like Schedulicity Pay, which cuts down on those costs. Added bonus: it also falls under question #1 thanks to the time you’ll save cutting through the payment processing red tape by combining it with your appointment scheduler in one place.
The key here is to be honest with yourself when you’re calculating how much money the tool would save you. Take a look at your expenses and add up how much you’re spending on various aspects of your business—and see how quickly you’d make back the cost of an upgrade.
4 Apps That Save Your Small Business Money
- Honey. When you’re ordering items for your business, you want to pay as little as possible. Honey scours the internet for coupons and applies them right to your shopping cart.
- You Need a Budget. Is your business spending out of control? YNAB helps you manage your expenses.
- SkyScanner. If you find yourself traveling to industry events, SkyScanner is a must-have for travel booking. You’ll see the absolute lowest prices, and can set travel alerts for price reductions.
- Boxed. While a big box store trip means discounts on bulk items like toiletries for your studio, membership comes with a yearly fee—and the stores are often inconveniently located. Boxed takes the experience of wholesale shopping online, with no membership fee.
3. Can I afford it?
You’d be hard-pressed to find a small business without debt these days. Whether debt comes from the initial investment in the company or covering employee wages during a slow month, debt is commonplace for small businesses.
Before making any big purchases, sit down and take a look at your financial position. Can you afford it? Consider the following:
- Do you have the money saved, or would you have to take out a loan?
- Do you already have unpaid loans?
- How much debt are you comfortable taking on?
The answer to this question will be personal and different for everybody, but it’s always important to take stock of your financial position before making any purchasing decisions for your business.
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