by Haris Quintana
Success in business means keeping an eye on your overhead costs while also doing all that you can to boost revenue. Simple enough, right? But the waters are muddied when we consider the nature of business spending and which costs are or are not essential. There are some costs which, when cut can actually cost more money in the long term. Thus, cutting them is a false economy, and one that could hurt your brand building and slow your growth. Still, determining the difference between false economy and good fiscal housekeeping can flummox even seasoned entrepreneurs. Some costs may seem essential at first but can actually be pared down while others may seem superfluous but actually generate more revenue than they cost.
Let’s look at some false economy fallacies which can prevent you from balancing your budget and keep your business from achieving the marked and sustainable growth it deserves...
Under-investing in marketing
Marketing costs can quickly add up, especially when you’re reliant on paid ads to raise brand recognition. However, don’t let the cost of paid ads drive you to under-invest in your marketing efforts. In the digital era where consumers have more choice than ever, they know that they can afford to be fickle. Instead of under-investing in marketing, find ways to make your marketing more cost efficient, such as;
Supplementing paid ads with content marketing strategies to ensure they gain momentum
Carrying out extensive keyword research to ensure you don’t waste money on costly high-competition keywords
Maintaining a constant presence on social media, and engaging with your customers to create a community that builds brand awareness for you.
Pinching pennies with raw materials
If your business makes and sells its own products, it lives or dies by the quality of those products. Your products, in turn, will thrive or fail based on the quality of their components or raw materials. Under-invest in raw materials and it’s impossible to build a prestige product. And while being able to sell cheap might be a selling point at first, it’s not always sustainable in the long term. Cheap invariably means low-margin.
Replacing equipment rather than repairing it
Okay, so this one is more of a spending excess than a false economy. Still, many entrepreneurs assume that it’s more cost-effective to replace faulty equipment rather than invest in maintaining it and repairing it. And while buying new equipment can feel reassuring it’s almost certainly a fallacy to assume that it’s cost effective, especially when there are companies like ERD LTD, Inc. who can make ailing equipment good as new at a fraction of the cost of replacing it.
Under-investing in personnel
Finally, your customers don’t just expect a great product, they expect a great service to go with it. And in a fiercely competitive business climate your customer care is your value added. Make sure you invest your capital in a workforce worthy of your brand. Overworked, underpaid and under-appreciated employees are unlikely to deliver excellence on behalf of your brand or do your business justice.
