Spending money wisely is a key skill for small-business owners. In my business, the default position nowadays is to not spend at all.
The skill lies in drawing a line between worthwhile investment and avoidable cost. Take “office” software, for example: you can spend £190 for Microsoft Office 2010 Home and Business edition, or nothing for OpenOffice 3 – which you choose may depend upon the circumstances of your business, but my attitude has switched from automatically purchasing each new version of commercial software to at least questioning whether to upgrade.
This is partly due to the explosion in high-quality open-source software products over the past few years: OpenOffice is being considered by many corporations and government bodies because of the huge cost savings it offers, and given that most people use only a fraction of the available functions it’s quite difficult to justify buying Microsoft Office.
My attitude has switched from automatically purchasing each new version of commercial software to at least questioning whether to upgrade
In the real world, though, many of your clients are likely to use Office, and it might harm your credibility if their copy of Word 2003 junks your nicely formatted report, which is why I still keep at least one copy of Office available for jobs where a PDF isn’t enough.
Software is only one business expense, and decisions regarding staffing, business premises, hardware and insurance are equally vital.
Deciding whether you need insurance is easy enough, but you’re unlikely to want to build your own office or computers, so sometimes it’s a decision between buying-in or not doing something at all.
The more difficult decisions relate to services and skills: should you do your own book-keeping, hire someone or outsource the task? Should you format and submit your own company accounts or pay an accountant?
Most people outsource as much of the book-keeping as possible by hiring an accountant, even though by doing so they’re committing to a large additional cost. Why? Because they see such skills as highly technical, with expensive consequences for getting it wrong.
When it comes to marketing, though, many business owners see an opportunity to cut costs by doing it themselves: in contrast to accounting, for instance, they regard these skills as easily acquired, and if they get it wrong nobody cares because it’s only a website.
Diabolical websites
This, at any rate, is the only explanation I can think of for the continuing preponderance of diabolical websites and marketing literature.
People who wouldn’t think twice about paying a four-figure accountant’s or solicitor’s bill baulk at the idea of paying someone real money to design their website or brochure.
I appreciate that accountants and solicitors help prevent a business falling foul of laws and regulations that might threaten its very existence, but it’s equally true that without good marketing a business will underperform or even perish.
Ironically enough, one of my local accountancy firms continues to promote its services via a website created several years ago in FrontPage, which doesn’t work properly in all the major browsers and has a 1.2MB image on its homepage!
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