Where To Spend The Dollar

startup communities thoughts Apr 26, 2014

In most cases startups have very limited funding to work with and must utilize every dollar they get to make sure that their startup will survive. Let’s say your running a early stage startup and I give you X amount of money, for the sake of the article’s title let’s say I give you a dollar, what should you spend it on?

If you ask the marketing expert he will say that your money is best spent on marketing.
If you ask the programmer he will say you should spend it on improving the code.
If you ask the designer  he will want to improve the brand or the design of the website.
If you ask the sales manager he will want to spend it on sales.

To make a long story short, all of your advisors will point you in the direction of what they know best but it is up to you, the founder/CEO of the company to make that decision and no one can make it for you.

I have found a basic and clear question to ask when making this decision and usually the results are good. The question is:

“What option will return me the dollar the fastest?”

By making a decision based on when the money will return to you the fastest makes you think in terms of sales and practicality. If you can spend the dollar on marketing and get a sale worth $1 or more then that is a good option. If improving the code will increase your sales or if the redesign will get you more customers then they might be good options. But no matter what you spend the money on make sure that you get it back eventually. The money is always limited and you don’t want to have a guilty conscience because you killed the company by spending all it’s money on things that you thought were cool instead of things that returned you more money.

Money flows through a business like water and as the CEO your job is to make sure that more money flows in then flows out, by doing that you create a sustainable business.

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