How to Save and Where to Spend in Your Business

Virtually every small business owner thinks about saving money. And while cost-saving measures are important, especially in challenging economic times, there are areas where cutting expenses not only makes no sense, but can actually harm your business in the long run. There are a few specific areas in your business where you should focus on saving money, with a few tips about where you should splurge:

Save: Startup costs
Keeping your costs low wherever possible is important in the first few months to the first year or two of business. Since most startups don't have money coming in, minimizing expenses matters, especially if you're living off savings until your business takes off. For every dollar you spend, ask what you'll be getting in return and how soon the investment will pay off.

Splurge: Legal help
Many business owners avoid hiring attorneys to help with startup, because lawyers cost money- real money. But this is one area where spending can save you in the long run. Having an attorney help you to set up a proper operating agreement can mean saving you big headaches and bigger expenses down the road.

Tip: When talking with your attorney, keep your conversations brief and minimize the small talk. Track your time as much as possible so you can check your legal billing for any errors.

Save: Domain names and hosting
These days, the average domain name should cost under ten dollars. Hosting can be had for under four dollars per month, with free software included. Make sure you're working with a registered domain name registrar and a reliable host.

Splurge: Web design
This is a middle-of-the-road splurge. That is, don't assume you should spend what you'd spend on a new car on your web site. However, you don't want to go too cheap on your web site, lest you end up with a web site that doesn't serve your business needs.

Tip: Hiring inexpensive help on freelance web sites can do harm or good, depending on how lucky you are, and it's virtually impossible to get a great web site for free. Ask for references from successful business owners whose sites work well and serve their business needs and work with someone reliable who charges a fair price for their work.

Save: Office help
As any business owner knows, juggling is a skill most entrepreneurs develop, but there's a point at which it just makes good business sense to hire help. For many tasks, you can save a bundle on in-person office help by hiring a virtual assistant. As contractors, virtual assistants save you a bundle on the insurance and benefits you'd have to provide to an in-person employee.

Splurge: Office management
Even if you hire a virtual assistant to help you, as your business grows, there are certain tasks you'll want someone to take over. Hiring an office manager can help you manage a long list of responsibilities in your business, and can also help you manage your other team members. Invest enough time in hiring your office management and make sure you're choosing someone who will be worth the investment.

Tip: While you can hire a virtual office manager, you don't want to scrimp when you're hiring someone to represent you to clients and customers- this is the face of your business. Even if you hire virtually, make sure to interview well and check references.

While there are many places in your business where you can save money, if you scrimp too much, you can actually cause harm to your business in the long run. Make sure you know where to save and where to splurge, and you'll increase the return on your investments and see profitability come sooner.