We’ve all heard the phrase “you have to spend money to make money” – but is that always the gospel to follow with your business?
There are a lot of reasons to buy products and services that support your business and help it grow. However, it’s easy to fall victim to “bright shiny object syndrome” and pull out the credit card every time a compelling sales pitch persuades you that the latest marketing program, social media management tool or swag basket is THE thing that’s going to launch your company to the next level, whatever that is (because no one ever defines what next level even means, do they!).
Regardless, you know that at some point you have to invest in tools, people or programs to help your business grow. So what’s the best way to know when to spend more money on your business?
Follow this simple guideline: if it doesn’t serve your best customers better, you don’t need it.
Of course, this requires that you know who your best customers are. Do you? If you don’t have a crystal clear picture of exactly who your ideal customer is, then this expense management strategy simply won’t work.
If you need help defining your ideal customer, take a moment (okay, several) to find out. There are some resources here that will help you out.
But let’s assume you do know who you most want to work with. If you do, you already have a perfect framework for evaluating your spending – both current and future expenses. Let’s look at a few examples:
Should you buy those branded pens?
Been there, done that, bought the T-shirts (wanna see them? There are still dozens in my closet). I got one lead from a branded pen in two years, and it didn’t convert. If you don’t have a method for getting your swag in front of people who are similar to your current best customers, then you don’t need the swag. Thinking of taking some promo products to a conference? If the audience is hyper-targeted and you already know that the majority of them would make great clients, then maybe the swag is a good idea. If you’re not sure, then stick to cheap and easy business cards. If your ideals are there, they will filter themselves and they will respond to your message whether it’s on a piece of card stock or an LED flashlight keychain.
Should you buy that email marketing course?
Well, does your ideal customer respond to email marketing? Personally, I convert a lot better when I can get people on the phone, plus my best clients like to talk to me and hear my voice – that’s how they learn best. So an email marketing course won’t serve my best clients better, because they prefer to get minimal emails from me. The ones I send are enough. On the flip side, if you sell retail products and your ideal customers love bargains and great deals, then email marketing could be your ticket to a massive spike in income – and way happier buyers.
Should you buy that Customer Relationship Management (CRM) software?
Internal and operational expenses can be really hard to evaluate because your customers don’t actually see or interact with the tools you use to run your business. So, you might think it’s impossible to use the ideal client strategy to assess this type of spending. Wrong! Internal tools make it easier and more efficient to complete the repetitive tasks in your business, which frees up more of your time, which reduces your stress, which allows you to serve your best customers better. See the progression? So, when you’re evaluating a CRM or a bookkeeping service or an email management tool, consider how the tool will allow you to improve your quality of service.
You can apply this strategy to your current spending as well. Doing so allowed me to reduce my monthly operational expenses by $4,000 without sacrificing one bit of service quality for my clients. And that’s (literally) the bottom line.
What have you been thinking about buying for your business recently? Leave a comment with your thoughts on how buying it (or not) will help you serve your best customers better.
Guest Post: Jessica Oman
When Jessica isn’t busy helping new entrepreneurs create business plans that they actually use, she’s road-tripping in the USA with her hubby and pooch, or developing her appreciation for a good West Coast IPA. Sign up here for her free 5-day business planning video course and start creating a plan to rock your business in 2016.