As a small business owner, you wear a lot of hats. Some days you're an executive, some days you're the marketing department, and some days you're the janitor. And on the busiest days, you're all those and more. Still, there comes a time when you need to bring in backup, even if you're operating on a limited budget. The tricky part is identifying those times.
It's difficult to determine what services you need to run your business and which are luxuries that you should pass up. For many small business and startup owners, every dollar that isn't invested in growth is carefully scrutinized. That isn't necessarily a bad thing, but being too thrifty can negatively affect your business.
While it's natural to want to save your business money--either by tackling things yourself or doing without--that could lead to trouble later on. Follow these three rules to determine when you should scrimp and when you should spend:
1. Limit yourself to mission-critical tech solutions.
Finding the right tech solution is tricky under the best circumstances, but it's especially tough for small business owners. That's no accident. "Technology companies profit by keeping their products complex," says Colum Donahue, CEO, and co-founder of Genuity. "Small and medium-sized businesses (SMBs) are working hard every day to stay competitive and grow their business, but they don't get to enjoy the efficiencies and support achieved by technologies that larger companies can afford."
Before you enter into a contract for expensive technology that's difficult to use, make sure you know exactly what you need. Look for a tech solution that solves a very specific problem that's hindering the growth or success of your small business. For example, say you can't keep track of individual customers, and it's leading to less-than-stellar user experience and costly customer churn. In this case, CRM might be an appropriate solution. Before you sign on the dotted line, though, make sure you know what kind of support you can expect. As a consumer, you expect customer service to be free, but tech companies often bill businesses for additional support.
2. When in doubt, seek out sound legal advice.
You may be able to take a risk and hold off on purchasing new tech until you know what you actually need. But when it comes to legal advice, it's smart to err on the side of caution. Consult a lawyer before you make any big decision. Even if it turns out that your assumptions were correct, a professional opinion and the guidance that comes along with it can only help. All too often businesses put off the search for a good lawyer until they're already being sued or fined. Especially for small businesses with limited budgets, the best legal action is preventative.
Start your search by asking for referrals. If you've had a good relationship with a lawyer in the past, he or she might know someone who specializes in business law. Keep in mind that working with large companies requires a different skill set, so look for an individual or team with small business experience. Set your legal budget according to how important the matter in question is to the future of your company. If you're figuring out how to split equity with co-founders or investors, the decision might be worth millions down the road. Approach it with this knowledge in mind and with competent legal counsel on your side.
3. If finances aren't your strong suit, don't go it alone.
Think you can get by with a rudimentary knowledge of finance? Think again. The adage "cash is king" is as true as ever for businesses in their infancy. A CB Insights study included cash flow problems among the top reasons businesses fail. Of the businesses studied, 29% ran out of cash, 18% had pricing and cost issues, and 8% saw a lack of investor interest. It can be tough for independent small business owners to hand over the financial reins of their business to someone else, but it's a smart move that could help you avoid catastrophe when the numbers in your Excel spreadsheet just aren't adding up.
If you're only relying on your CPA once a year at tax time, don't go telling yourself that your business already has a finance professional. That said, you don't need to rush out and hire an accountant full-time. Lots of small businesses outsource their financial needs to a virtual finance team that might include a CFO, analyst, controller, and/or bookkeeper. Outsourcing your finance department could give you the expertise you need without breaking the bank.
Running a small business takes commitment and hard work, but it's important to know when to bring in outside help. There are plenty of areas where you can get by doing the work yourself, but it's best to leave some things to the experts. If you need a critical tech solution, legal advice for an important decision, or help balancing your books to keep your business afloat, stop waiting and reach out to a pro. They'll give you the guidance you need to get ahead of any problems, and you'll enjoy peace of mind knowing that the job is being done right.