You got into business to serve others and make their lives better. However, when starting a business, there are so many things people THINK they need. When shelling out money for these things, they unwittingly take on extra stress. Sometimes they’ll even get into debt over it. That doesn’t have to be you. Here are the 5 biggest wastes of money starting a service business:
5 Biggest Wastes of Money Starting a Service Business
- Office space
Commercial office space costs a lot of money. When the only employee is you, it will mostly sit empty, or serve as storage space. If you must, find a coworking / incubator space if you don’t want to take meetings at home. Until then, save the money you’d spend on deposits, electric bills, and cleaning the place.
- A branded truck or vehicle
Even used, a truck is a massive expense. It is unlikely your vehicle branding will attract customers in the beginning. It takes many impressions to become top of mind when a buyer makes a decision. A branded truck is quite useless when you’re the only one driving it. Once you have a steady stream of customers, and other people driving to sites for you, it changes. At that time, branding on the side of vehicles lends extra marketing leverage to otherwise necessary expenses.
- Business Licenses (hear me out)
In many professions, not having a license can get you in legal trouble. In those cases, get a license. Licenses can also be necessary in major municipalities and certain states. In those situations, get a license. But don’t just assume you need one before reading to confirm it!
If you can operate in a municipality or state that doesn’t require a license in the beginning, take note. Also, if you only take jobs that don’t require a license, you can establish a reputation and get some cash flow before investing in a license. For example, in many states you only need a residential plumbing license if you are operating on the pipes in the walls of the house or leading to the home. On the other hand, a leaky faucet, a sink drain, or a leaky shower head can be fixed without a license. Check with your local laws, and you’d be surprised what you can do and how fast you can really get started.
- Graphic Design
Graphic designers may crucify me for this. To be clear, I’m not suggesting that anyone who would benefit from graphic design not get it. Rather, if you have no business income, fewer than 5 customers, and other higher priority expenses, avoid high-end branding packages. If this is you, sure, a graphic designer will take your money and probably do a good job for you. However, you’ll want to avoid any expenses that don’t lead to
i. Doing a great job for your future clients
ii. Actually GET you more clients
Graphic designers usually don’t fit the bill unless you’re a visual heavy firm, like an ad agency. In that case, you are more likely to do it all in-house in the first place.
- All-in-One Software Subscriptions
If you can pay only for what you intend to use every day, or better, use the free tier of some of these software programs, it will reduce your monthly expenses.
- Bonus! Full-time or Part-time Employees or Contractors
You’ll resent having to pay them because you don’t have the cash flow for it. Or worse yet, you’ll pay them so little they’ll resent having to work with you. In the beginning, you are the service provider, until you can pay for your living expenses, business expenses, and a little more.
When Contractors Start to Become a Good Investment
If you’ve moved past this level, and wish you had tips like this when you were starting out, reach out to me. I can give you a free bookkeeping consultation call and help you not only track your money, but save more, deduct more, and help you reach your business goals.