New business owners often don’t know where to spend money, resulting in inefficient use of already limited funds. How you allocate money in the early stages of your business’ life is a critical determinant of long-term success.
Prioritizing activities that will raise awareness and generate interest in your company are always good places to start. You can have the best product in the world, but if no one knows it exists, your company is still going to fail. When starting a business, there are certain areas that extra spending will generate the best return on investment for you.
To make the process easier for you, we put together an extensive list of the crucial things new businesses should be spending money on. Here are some of our top picks: Market Research
1. Market Research
Market research is often overlooked as a place to spend money when starting a new business. Conducting primary research can be costly, but it is an absolute necessity to determine any gaps in the market that your company can fill. Seeing as the #1 reason why startups fail is misreading market demand, it’s clear that spending on market research is crucial for new businesses.
Beyond determining gaps in the market, market research can help you identify and hone in on your target market, so you can convey your marketing messages in the most effective way possible. Market research truly is an investment, but it is one you are sure to see a high ROI from.
If your budget is stretched razor-thin, there is a plethora of secondary research available online for a much cheaper cost—but you are always going to need at least some level of primary research specific to your company.
2. Customer Service
As marketers, we know how important customer service is to the consumer experience. Seeing as almost 50% of consumers last year switched to a competitor brand due to unsatisfactory customer service, it’s clear that one of the best ways to set yourself apart from competitors is by having superior customer service.
It’s important to remember that customer service goes beyond just acquiring new customers. As business professionals, we’ve all heard that attracting new customers is (at minimum) five times more expensive than keeping existing ones, so it’s clear that retaining customers is crucial to a successful business model. Having great service throughout the entire customer experience can ensure your customers keep coming back.
With the thriving economy, there are constantly new businesses popping up and saturating every industry imaginable. It’s harder than ever to make your business stand out, and strategic branding is a key way to set yourself apart from competitors.
In the age of the internet, having a strong online presence is a key factor in branding your company. Seeing as 97% of people learn about local companies primarily through the internet, having a clear, defined brand presence online is crucial for your business to succeed.
Marketing (along with operations and finance) is one of the three main pillars of any business. You can have a great product or service, but if no one knows about it, it’s not going to sell. With the rise of the internet, marketing is becoming more affordable than ever due to owned media channels. Marketing is an area where you don’t have to spend a fortune to be seeing fantastic results.
As a new business, you should be spending more than the average of 7.9% of revenue on marketing. You need to raise awareness and get people to gain interest in your brand, and marketing is the best way to do so. Optimizing your website and setting up social media channels are great (and free) ways for brands to start.
5. Legal Advice
While outbound efforts to gain traction for your business in the marketplace are extremely important, protecting yourself from potentially catastrophic legal action is crucial as well. Whether you’re a subcontractor looking for a construction bond to ensure payment or a SAAS company wanting to protect intellectual property, it’s necessary to have a legal professional assist you with these tasks.
Their expertise can ensure your business is protected from legal action that could lead to the demise of your business. Additionally, they have the legal expertise to help with crisis management incidences that could hugely hurt your brand image if handled improperly.
The importance of a strong marketing plan for new businesses cannot be understated. Spending on market research, customer service, branding, marketing, and legal advice are all smart places to start. For the complete list of where to spend money as a new business, take a look at the infographic from JW Surety Bonds below.
Sierra Skelly is a creative writer and content marketer from San Diego, Ca. She writes for clients in a variety of industries ranging from personal finance to travel.