Business Spending Tips
If you’re a fledgling entrepreneur the word ‘spending’, probably makes you feel a little uncomfortable. And well it should! Those who start up new businesses have cost aversion built into their DNA and look at all spending and overheads with suspicion if not outright fear. But, as the old saying goes, it takes money to make money, and while businesses (especially nascent businesses) face a near-constant battle to keep their overheads down, there are some areas in which judicious spending can reap real dividends.
Know your fiscal multipliers
A fiscal multiplier might sound complicated, but it’s a fairly simple economic concept. It refers to the ratio of spending to the level of economic activity that that spending generates. Let’s say, for example, that you invest in a new piece of equipment that increases productivity so much that it generates an extra $2,000 of profit in its first year. The fiscal multiplier for the piece of equipment would be 100%. Of course, not every investment will yield such a high return on your investment but there are usually areas in which all areas can make long-term savings by diverting their funds to the right places…
Many new businesses fall afoul of the IRS through either sloppy bookkeeping, a lack of understanding of the intricacies of tax law, or a little of both. Hiring a tax attorney, or better yet a former IRS attorney who’s conversant in tax law to aggressively represent your interests will save you far more money than they cost in the event of a lawyer. Likewise, bookkeeping and accountancy are always prudent areas in which all businesses should be spending to avoid the risk of disproportionate taxation.
It’s not uncommon for new businesses to be averse to capital investments. After all, they’ve just sunk a significant amount of capital into acquiring the tools to start up their business. However, it’s important to move on opportunities to improve your output, volume, and productivity as they arise as these will be the key to future growth.
Hence, it’s important to maintain the liquidity of your business so that you can take advantage of these opportunities before your competitors do and give yourself the leading edge. Good examples of capital investments include discounted batches of stock, more productive equipment or a better premises with more passing foot traffic.
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Your business is great. In fact, you’re probably the best in the world at what you do, but it means absolutely nothing if nobody knows who you are. Thus, enlisting the age of a digital marketing consultant is important to draw new business and consolidate your relationship with your existing client base.
A lot of digitally savvy entrepreneurs start out believing that they can make significant savings by handling all aspects of digital marketing themselves, and while they may well have the skills and knowledge, this is rarely a sensible investment of their time, effort and resources. After all, they’ve got businesses to run. Given that marketing costs usually yield a return:investment ratio of around 5:1, it’s fair to say that content creation, PPC advertizing and external marketing fees are sound investments and reduce spending.