It's no secret that entrepreneurs make a lot of mistakes. I've made my fair share that have yielded less-than-desirable results. Those mistakes aren't always bad and it's contributed to my growth as an entrepreneur.

You can expect to make plenty of mistakes along the way. However, that doesn't mean you should charge headlong into spending with reckless abandon just because it might be a learning experience.

There are plenty of things that you have to spend money on for your startup, but it's important to know the difference between necessary and frivolous spends.

A lack of a capital is the number one reason small businesses and startups fail, but it's not always a result of underfunding. In some cases that lack of capital is due to unnecessary spending.

Careful spending is important in any business, even music. "You have to pay attention, like with tours and expenses; you have to factor that all in," says rock guitar legend Zakk Wyldein an interview with Examiner.com. "You want to play music for the rest of your life, you have to pay attention to all the things."

Here are seven expenses you should absolutely avoid even if you're a cash-flush startup.

1. Expensive Subscription-Based Services

Marketing automation and accounting software/services can be necessary spends. However, just because it's a necessary spend doesn't mean you should jump at the most popular service.

Many marketing automation platforms are designed for enterprise-level organizations (with subscription costs to match). You can find options better-suited for startups that will be more aligned with your budget.

2. Expensive Office Space

You want your clients to feel comfortable about doing business with you, and you want a comfortable space for the team to operate in. Unfortunately, the cost of creating that operational paradise can get steep. Focus on a positive revenue stream and business growth first. The cushy office can always come later.

If you can work in a shared office space, or even out of a residential space like your home or garage, then do that. Keep your funds directed toward business growth until absolutely necessary.

3. Overstaffing

It can be exciting to watch your business grow and provide employment in your community. Unfortunately, if your business isn't ready to handle the overhead in the early startup stage, you could drain your funds quickly. Extra employees just become a waste of money.

Instead of hiring full-time employees from the start, try outsourcing. Use freelance or contract employees on a per-project basis. Get a virtual assistant instead of a full-time administrator. Keep the purse strings tight until you're absolutely certain that it's time to start hiring.

4. Expensive Office Equipment

You shouldn't buy anything that's expensive unless your business cannot operate without it. Find ways to do the work without the need for costly equipment. It might be tempting to purchase the latest and greatest technology, but a high price doesn't really mean it's useful to your business, or that it's a smart business expense.

Spend money only on the equipment you need to operate your business right now, and purchase that equipment as economically as possible.

5. Buying People

It's surprising how many companies still try to purchase an audience to create a shortcut to future sales. This process rarely works, is often a scam, and typically results in wasted money.

"If you look at the fake accounts, their followers, and who they're following, some patterns emerge. Most of the fake accounts tend to follow thousands of people and don't have many followers themselves," writes Adrianne Jeffries in Verge. "That's because most are fake bot accounts."

Don't ever purchase followers, likes, or email lists. You can't buy engagement. While it may look good to say you have thousands of followers or likes, those fake follows aren't going to offer any kind of measurable engagement. That will only hurt your outreach in the end and it won't produce sales.

6. Non-Measurable Marketing

Every marketing effort has a cost, be it time or money. Since your time is a limited commodity, it has its own price tag. When you're marketing your startup, you want to avoid any kind of marketing that can't be easily measured.

If you can't measure the results of your efforts, don't spend time or money there. While there are plenty of unmeasurable tactics that can generate business, your focus needs to be on increasing revenue. You want to deploy campaigns and tactics that provide results and data you can examine to make improvements for future campaigns.

During your startup phase, your cash reserves are limited, and it's not the time for shot-in-the-dark marketing efforts. Try to find measurable ways to market and grow your business with little-to-no cost.

"In my first start-up, I had an initial ad budget of five dollars per day total," says Eric Ries, author of The Lean Startup. "That would buy us 100 clicks per day. At five dollars per day, marketing people scoffed and said that is too small to matter. But if you think about it, to an engineer, 100 real humans everyday giving your product a try means you can really start improving."

7. Branding "Goodies"

As a new business, you'll want to focus on meeting the needs of your customers. This is your highest priority. Printing your logo on letterhead and promotional products like shirts and hats is a feel-good activity that doesn't really bring any value to your business. It certainly doesn't contribute to revenue in a way that justifies the expense during your startup phase.

Things That Matter

Every business is unique, and that means spending needs will vary based on your business model and how you engage your audience. Always keep your focus on the customer and spend money only on the things that are truly important--the things that bring value and contribute to revenue growth.

What do you think are the biggest money-wasting expenses for startups? Share your thoughts in the comments below:

Published on: Jun 21, 2016