As your business grows, you may feel tempted to spend more than what you planned. It’s natural—after all, you’ve earned a lot; why not buy something to give back for you and your team’s hard work? But if not kept in check, overspending will definitely hurt your business. Find out the consequences of overspending below.
Investment or derailment?
The need to further expand your business may actually be a reason to overspend. If you haven’t done the proper research or the legwork in seeing if an investment will work for your organization, chances are, you’re bound to be spending for nothing.
Let’s take advertising as an example. Choosing the first firm to offer its services may prove to be costly. Take time to compare services with other groups—you’ll want to invest in something in line with your business’ growth.
Swag over practical needs
Don’t fall into the trap of buying products just for the sake of bragging about your success! Sure, your brand earned a lot this year, but is that a good enough reason to buy a sports car?
Consider real business needs. If your business does need a car, get a vehicle that actually serves your needs. A van may prove its worth more than an expensive sedan in terms of delivery and mileage.
Don’t fall for a bandwagon!
Just because everyone’s into it doesn’t mean you need it.
What works for other organizations doesn’t necessarily mean it will work for yours. Let’s go with Jollibee. Just because that brand offers a Happy Plus card to engage customers doesn’t really mean you can expect instant results if you integrate something similar for your business.
Emotions play a big part in spending (and saving)
We Filipinos tend to be really emotional. We’re happy people who also invest hours of our lives watching television dramas.
However, emotions can work against us, too. That happy-go-lucky mindset means most of us have trouble saying no. And in the workplace, that can spell disaster, especially if someone is selling you something or telling you to do something.
Be more assertive. If a family member tells you that you need to buy something for your business, always make sure to consult first with your partners or staff. Or if a client negotiates a discount or some extra services, be firm in asserting the right fees for your work. The point is, you can’t always say “yes” to everything. Which leads us to our last point…
The Bottom Line: Think first before you spend
In any case, always consider your options before making a purchase. There’s a lot at stake when you’re spending on your business.
Aside from the potential risks of spending for something you don’t really need, your employees could stop trusting you if you’re making hasty decisions. Remember: your business doesn’t just involve you!
Create a plan, stick to a budget, and spend accordingly.