When running your own business, you have to be cautious about expenditures. There are companies that have been so tight that they could bootstrap themselves and build a business without giving away large chunks of ownership. They won't get those calls from venture capitalists insisting on exit strategies that can negate almost everything they've built.

Frugality is good, but I was reminded how too tight a hand on the dollar can hurt. In the middle of some work, I had an emergency IM from someone who said that a graphic table was a little too wide. I had pulled it together in Photoshop, but also have a screen capture took called SnagIt with an image editor that has some slick capabilities, like setting a vertical cut that removes a section of image and closed up the remaining parts. If I hadn't previously invested in that application, I'd have had to spend more time in a clumsy effort to duplicate the same effect.

The same thing happens in all businesses. Maybe you're a photographer who needs an unusual lens every now or a carpenter who carries a special wrench or highly-accurate square for those rare occasions. You might analyze companies for investors and need a quick way to pull together custom graphs or examine the performance of a particular metric over time or could greatly use a way to track customer response to an email campaign.

Any business always faces the danger of investment needlessly, and the more people in the company, the greater a chance that more unnecessary spending could happen. But there's the counter danger as well that you'd save the pennies and then spend the dollars (and hours) trying to work around the limitations of your current tools.

There's a relatively easy analysis to do. Consider how much time it takes to work around the lack of a proper tool. Consider how many times the function happens in the course of a year, multiply that by the hourly equivalent cost of the employee, and then double that amount, because you want a return on your investment in people's time. If the numbers are even close in size, buy the tool and stop worrying about it (unless the amount of outlay would endanger your cash flow and operations, in which case you have bigger problems that you'd better consider).

Published on: Jun 9, 2015