As a business owner, you want to maximize your profits and minimize your spending. However, you certainly have to spend some money. You may need to rent office space, pay employees and purchase equipment. There are also times when it will cost you more to keep doing things the old way than to purchase the right tools to upgrade your processes. However, deciding when spending more money is the right move and when it’s a waste of time is important. The tips below can help you with that decision.
Employee retention is important. Hiring and training new people costs money. For this reason, you need to keep your employees satisfied. However, this can be trickier it looks. While your employees will naturally want a raise and more perks, there are a couple of important points to consider when it comes to either of these. First, how does what you are paying fit in with the industry standard, and how much do the benefits you offer increase that value?
Your employees would be delighted if you paid twice as much as any other company, of course, but there’s no need to go that high, and chances are it wouldn’t be sustainable, meaning that soon everyone would be out of a job. The other thing to consider is how much certain perks actually mean to your employees. Keeping the break room stocked in free snacks might be something that is nice to have but because it’s not a make-or-break deal for your employees may not be the best use of your money.
One of the best reasons to spend is when it’s going to substantially improve your efficiency in some way. This is the case with an innovation like truck cams for your fleet. AI dash cams may have a cost up front, but they will end up saving you money, making it easier for you to track your vehicles, and ensure driver safety. Similarly, if your employees are working on an outdated system, it may be taking them far longer to complete tasks than it would if you invested in something newer.
As is the case with your employees, make sure that the extra mile you’re going for customers is actually appreciated. Maybe you’re spending more than you should to ship products as quickly as possible when most of your customers are content to wait an extra day or two. On the other hand, upgrading your database might make it possible for you to address customer issues more quickly. You may need different solutions for loyal long-time customers versus new ones you are trying to retain.
The same as you had to visualize startup funding stages before you even opened your business, you have to have a vision that is backed by data for when the company needs to pivot. Any time you change processes or make purchases to improve how your company operates, you also need to be able to track the success of those changes. Therefore, when you are getting ready to spend money on an improvement, create a set of metrics to help you determine whether the expenditure was worthwhile. This can help you with future decision-making. Your metrics should be concrete in terms of time and value so that you have something specific to measure.
Disclaimer: This content does not necessarily represent the views of IWB.