Does Your Startup Have a Spending Strategy?
If there’s one thing pain management specialist Jordan Sudberg knows, it’s the importance of developing a good spending strategy. While it may be tempting for a new business owner to figure things out on the fly, that’s one of the quickest ways to meet with failure.
Jordan Sudberg on the Importance of a Spending Strategy
Founding a new business can bring with it a number of different challenges, although one of the most important being how to spend your limited capital. The nascent stage of a budding business can be the deciding factor in whether or not it succeeds, and the creation of a spending strategy that focuses on growth and sustainability is one step towards keeping it alive. While creating a spending strategy, most business owners will quickly realize that they’ll have to make some tradeoffs to keep their business in the black. So, how does someone go about creating a spending strategy?
The First Step: What Do You Need?
The first step towards creating a viable spending strategy is to break down possible expenditures into discrete categories. Categories such as wages, rent, and marketing. Even further, these can be placed into parent categories like needs or wants. Once a business owner has identified their potential spending outlets, they can then begin deliberating the potential expenditures in their budget.
Temper Your Expectations: Finalizing a Budget
With any business venture, it’s always important to prepare for things to go awry. Any good startup budget is going to make allowances for losing money in the first year or so. While this isn’t always the case, having a healthy cushion to fallback on in lean times can keep a business in the game much longer than one that needs to borrow money just to stay open. After allowing for that, your spending strategy can begin to be outlined, focusing on your absolute needs, like wages and rent, and moving on to your wants with the remainder of your budget. Over the course of the first year or so, it’s possible to use data on revenue growth to slowly perfect your spending strategy, although it’s important to be aware that any initial demand for your product could be driven by the novelty of a newly owned shop, and any changes to your spending strategy should be done tentatively.
Learning From the Past
While any business will likely be highly personalized by its owner, it’s incredibly important to look at similarly situated businesses that became successful and learn from their trials and tribulations. By taking an in-depth look at how other startups created their own budgets and drove up demand for their products, Jordan Sudberg thinks it’s possible to avoid the pitfalls that can lead a business to ruin. While it may not be fun, research is a vital part of any business. It’s also important to remember that there are no new mistakes, someone somewhere has made that same mistake, and it’s completely possible to learn from them rather than experience.