Cutting For Growth: Areas Where Too Many Startups Overspend

The formation of your own business is a wonderful accomplishment and one which should be celebrated. Small businesses are great on a number of levels; they benefit the local economy, create jobs, generate wealth and (unlike the majority of the corporate titans who seem to make up their own rules as they go along) pay their taxes. But aside from all that, every small business represents a person who has had the fortitude, talent, and ambition to shrug off the limitations of the rat race and strike out on their own. But while this is a wonderful and empowering thing, going from salaried work to entrepreneurship is a steep learning curve. Without the watchful eye of a boss it can be hard to stay motivated and without a clear path ahead, it can be difficult to choose the right strategy for your business. Above all, many new entrepreneurs struggle with finding that difficult balance between keeping their overhead costs manageable enough to keep their cash flow healthy and investing enough into the business for it to operate at peak efficiency and manage its own growth sustainably.

As a result, many businesses under-invest instead of cutting down needless expenses and overinvest where they should be cutting costs. Here are some common areas of overspending for new business which need to be carefully managed.


In the digital realm, branding marketing and PR are valuable commodities. But while it’s certainly important to invest in creating and refining your business’ branding, not all areas in this multifaceted discipline offer equal return on your investment. For example, investing in a top rate graphic designer for your logo is a pretty shrewd move, but you don’t need them to design all branded materials that use it. A Pay Per Click advertising campaign can be a great way to raise awareness of your brand in the early days, but it’s far more effective to capitalize on that with organic strategies than to keep throwing money at paid advertising.


While small businesses absolutely should be aware of their tax obligations, many nascent entrepreneurs end up paying far more of their profits to the IRS than they should by virtue of the fact that they don’t fully understand what can and cannot be claimed as a tax-deductible expense. Fearing the prospect of reprisals from their local tax authority, many decide to err on the side of caution and refrain from claiming something that they’d be perfectly entitled to claim. Check out this QDOS accounting expenses guide to help to improve your understanding. Your profits are of paramount importance in your early years, so don’t let the IRS take any more than they’re due.


While all entrepreneurs dream of a pristine and luxurious office space, they should keep their expectations modest in their first few years of trading. Many new businesses set themselves up in classy and expensive premises that are surplus to their requirements, under the proviso that they’ll grow into them. This is not an area where you can afford to overspend, especially if it locks you into a long lease.


By cutting unnecessary spending you’ll be able to keep a healthy cash flow that will lead to sustainable long-term growth.

FG Editorial Team
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