What’s the best thing a relatively young business should invest extra money in and why?
The following answers are provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. An Advisory Board
You will undoubtedly come across big obstacles and face tough decisions as a young business. The best thing you can do is find a proven advisor in your field and invite them to be an advisory board member. While you need to compensate them with equity or pay, avoiding just one big mistake or making a great decision the first time will pay for that expense 10 times over.
2. A Preliminary Legal Check on Your Brand Name
Invest in a preliminary legal check before you start to use the brand name to make sure it is not likely to cause customer confusion, which could result in trademark litigation. It is wise to make sure you are not stepping on anyone’s IP toes before you spend marketing time and money developing a brand name, not afterward.
3. Good People
When you’re young, each hire you make has a big impact on your culture, your product and the future of your organization. Offering your top talent extra salary and perks to convince them to join your organization is the best investment a young business can make. If you are a team of four and you hire one person, that new hire impacts 20 percent of your company. Investing in good people always pays off.
4. Ways to Find Talent
When you’re starting off, those first few employees can make or break your business. Finding top talent is easier said than done; that’s why you should invest your precious time and money in sourcing top talent. Even if you sorely need more employees, having an extensive recruiting and hiring process will always be worth it in the long run.
5. Programming Talent
From the very beginning, identify programmers who can help customize your processes and workflows and create tools that will streamline and facilitate your growth. A talented programming team can significantly reduce your labor costs and help maximize productivity. In the long run, this will be one of the most cost-effective investments a business can make.
6. Proper Legal Documents
If you don’t start with a strong set of documents (incorporation documents, partnership agreements, employment contracts, etc.), it’s a real mess to retroactively repair. Another incentive for starting early is that law firms will often defer their fees until you raise capital, so invest early in having buttoned-up legal paperwork, because amendments to those docs can be very costly!
7. A Community or Culture Built Around Your Brand
Spend the extra money interacting with “your people.” Become known in the community, be friends, and be helpful. Take part in charity events (donate time and/or product). It is worth the extra investment for the long-term benefits of a community that wants to help you succeed.
8. A Savings Account
If your business has “extra money,” it’s time to stop and check your thinking. “Extra money” implies that it’s more than you should have. That’s never the case. Nothing kills a business quicker than running out of money. If you don’t have a clear and present business need, don’t look for ways to spend money. Save it until a need or opportunity presents itself.
9. A Mentor
Find a mentor who has reached the level that you want to reach and knows what it takes to be successful. Pay this person so that he or she is invested in your success. Set up an hour a week (to start) and an hour each month regularly with check-ins and progress updates so that you’re held accountable. The mentorship will prove invaluable for you over the long haul.
10. Brand Awareness
As a young company, the biggest challenge is getting your target market to know you exist. Investing in brand awareness activities where you can hand out business cards to a targeted audience is a great way to open new doors to customers.