How Much Should You Spend on Your Business?

Business & entrepreneurship

How much money have you spent on a business? How much capital have you raised?

One topic that has been on my mind lately is the idea of spending money on your business. I always think about this sort of stuff because there are generally two schools of thought on financing a business:

  1. It’s okay to spend money. You can expense it and it will be itself off in the long run.
  2. You should be as frugal as possible. Start with a small investment and grow from there.

Let’s look at what’s involved here…

What are good ways to spend money on a business?

Some of the best investments could be:

  • Attending a conference.
  • Hiring quality staff/freelancers.
  • Buying new equipment.
  • Training.
  • Upgrading your skills.
  • Legal protection.
  • Improved resources.
  • Any sort of networking opportunity.
  • Consulting services.

What are horrible ways to spend money on a venture?

Hmm time for the flip side. What are some horrible things you shouldn’t spend money on?

  • Office space if you don’t need it.
  • Staff if you don’t have any extra work to delegate.
  • Fancy business cards.
  • Expensive dining.

Money spent also depends on the stage…

I’ve noticed that your stage and growth will determine how much money you should spend. A rookie might not want to dive all in with spending because they still haven’t proven that their idea can make any money. When you’re getting started your goal should be to find some paying clients first.

When you’re more involved and are making money, then you might want to take some huge risks.

I remember I used to work at a friend’s dads warehouse. One day the back room received a huge shipment. We asked him what the plan was and he told us that he had taken a huge risk and invested into a shipment of new goods. He wasn’t sure it was going to work, but he knew that this was a calculated risk worth taking.

Those were just some rough thoughts on spending money on a business. I’m interested in hearing from you guys.

How much have you spent on a business in the past? Do you regret spending too much money at some point?


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Custom Orthotics Culver City

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How Much Should You Spend on Your Business? | Experiments in Finance