Hi Mustachian small business owners,
I'm curious if anyone feels like they have a split personality when it comes to spending on themselves and spending on their business?
I recently opened a solo law firm. I've got insurance costs, cell phone, web site costs, office space, etc. I compared notes with a much more established solo practitioner and found that my monthly overhead costs are about a tenth of his!
One of my goals is to keep my overhead as low as possible (duh, right?). Yet my profession is not known for its business sense. Many of my competitors spend a lot to impress clients, or just because they're busy (i.e. they go with the local telephone service provider and get ripped off on their multi-line set up, instead of figuring out a much cheaper VOIP system).
Yet in a client-facing business, higher overhead often equals the perception of higher quality. Similarly, charging more for your services signals quality. So being anti-mustachian is a defensible marketing strategy: if you can spend a ton on your office space, and charge your clients a ton, the you must be a good attorney, right?
Obviously, I don't agree with that position. But if spending more makes you more efficient or gets you more clients, then I see the value. MMM has those 5 nail guns.
In my personal life, I tend to err on the mustachian side of spending a lot of time to figure out the cheapest/most efficient way to do things. I'd like some of those hours back I spent researching the best/cheapest audio set up, for example.
In my business life, I do less of that. I'm still figuring the balance out. For example, I'm paying for a professional website. First, I spent a lot of time screwing around in wordpress and looking at elance. I built a serviceable website but I have little design sense, so it looked like crap and I wasn't sure what to put on it. Ultimately, I decided to spend more for a professional developer. Once I made that decision, I decided that a $250 website from elance wasn't good enough, so I found a Western developer that does good work and am spending $2000 for something with good design and some careful thinking on how the content fits my branding. If it gets me one or two extra clients, I'll make the money back. I think it's going to get me like 10 extra clients this year.
How do other mustachians evaluate the same dilemma?
More broadly, how do mustachians evaluate uncertain and *unnecessary* investments in a small business? When I say unnecessary I mean things like the marketing budget; a larger monitor (I want a 27 inch one because it would make doc editing much easier; but I could get by with a 24 inch monitor; currently I don't have one, so right now I get by with none); a new laptop (mine is a 2008 and I'm using it much more intensely so it's starting to slow down...and those new mac air laptops look pretty slick...).
My business makes money. It can *afford* those things. But every dollar I spend on the business is roughly 70 cents of after tax income, or a nice contribution to a SEP-IRA. I have some savings, but not much. Right now, it makes a much more sense for me to focus on increasing my income, while keeping my expenses low.
I'm trying to think of good rules of thumb to evaluate these uncertain investments.
Even if it makes me more efficient, it's hard to know whether a 27 inch monitor is worth it. Or how much a new laptop helps. Or how much the website helps. Or how much the marketing helps.
How do other mustachians deal with this?
My thoughts are a little jumbled, but if you've been in this place, I'm sure you've thought about it. Thanks.