Important Startup Expenses Many New Founders Don’t Budget Enough For

When starting a new business, the costs involved to get off the ground can add up quickly. In the face of these costs, many entrepreneurs choose to cut back on certain functions or areas of the business to make room for “more important” expenses.

Being budget-conscious is a wise trait in a business owner, but pinching pennies too tightly can end up being a costly mistake, especially if an owner isn’t leveraging all the tools and resources available to support and grow their business. Below, 15 Forbes Finance Council members share products, services and needs many business owners don’t budget enough for and why each is so important.

1. Good, Qualified Talent

Hiring good talent is critically important. It’s easy to “settle” for someone with less experience and a lower salary requirement. Nothing can replace talented people who not only do the job but add diverse value to the team and the business. Hiring the best possible person, even if it costs a little more, almost always pays off in the long run. – Julie Fergerson, MRC / Merchant Risk Council

2. Employee Retention

Employee retention is an area many business owners don’t budget enough for. They hire the right people to be in the right seats, and then they lose them to competitors. The cost of replacing talent can be high, and we lose time and productivity while we retrain a new hire. More focus on employee benefits, bonus structures and key employee retention options is key to business growth. – Robin Vernon, Proper Wealth

3. Self Education

Business owners often don’t budget enough for education. They tend to invest lots of money into marketing but not enough money into hiring a consultant to help them scale efficiently. The marketing is great. However, quick growth can result in some unforeseen issues. It is a wise investment for business owners to consult with an expert to create a plan to scale and onboard new clients. – Corey Patterson, Corey G. Patterson, CPA

4. A Professional Social Media Strategy

Even in 2022, many business owners still resist investing in a professional, omnichannel social media strategy. Either they are stuck in a bootstrap mentality and think they have to manage every channel themselves, or they underestimate the ROI of personal branding and high-quality social media. This is a mistake that costs them in the long run. Don’t be afraid to invest in yourself—you’re worth it! – Amanda Dixon, Barney

5. Effective And Consistent Marketing

I often see business owners underfunding their marketing efforts. When times are tough, marketing is usually the first thing to go. But successful marketing requires time and consistency. It doesn’t behave the same way as a typical investment. However, effective and consistent marketing can have a significant and positive impact on your bottom line and the growth of your business. – Justin Goodbread, WealthSource Partners, LLC

6. Financial Software

It’s important to have well-functioning financial software and good accounting employees or consultants. We have seen business leaders who think spending $25 a month is too much for QuickBooks software—this is the heart of your business data. Or, because the software is inexpensive, they expect the services surrounding it to be low-cost, too. Devaluing what good financials can do for a business can slow or halt growth opportunities. – Marjorie Adams, Fourlane

7. Expert Tax Help

One service that business owners don’t budget enough for is expert help on taxes. Taxes are complicated, and the difference between consulting an expert and using someone off the shelf can have a massive impact on the net cash flow that a business throws off in a year. Yet many successful business owners still use the same tax preparer they had eight years ago, even though their business has outgrown them. – Andrew Glaze, Wealth Stack

8. On-Demand General Counsel

Business owners should have on-demand general counsel. An experienced business attorney can help make sure your company is incorporated properly and review all of your customer and employee contracts. They will also know when you need to tap into the services of a specialized legal expert (for example, an authority on intellectual property, employment, litigation and so on). It is a lot cheaper to set things up correctly at the start than it is to deal with the consequences when you don’t. – Aaron Spool, Eventus Advisory Group, LLC

9. A Strong Technology Team

Often, small businesses don’t leverage the capabilities of the technology they already own or pay license fees for. Even more of them don’t keep a constant eye on their tech stacks and look for opportunities to better leverage technology. Tech should be viewed as an investment, not an expense. When its tech team is firing on all cylinders, an organization is able to reach much greater potential. – Justin Sanderson, Sanderson Wealth Management

10. Necessary Risks For Growth

Balancing costs against growth is the most challenging task for a business owner. Most owners don’t budget enough money for growth investment—marketing, public relations, product improvements, innovation and so on. Growing a business means taking risks to enter new business verticals and find new or additional revenue streams. Growth is often taking one step back to take two forward. – Joseph Orseno, Tiltify

11. Vendors With Specialized Expertise

Many small-business owners overlook the benefits of engaging external vendors to gain specific expertise or efficiencies. Take an honest assessment of the internal skills of your organization. If gaps in capacity or skills exist, look for an external vendor to provide the expertise or efficiencies that are needed. This will provide time for the organization to create value by focusing on what it does best. – Rick Loss, MyBasePay, LLC

12. A Formal Business Valuation

Many business owners fail to budget for a formal business valuation. The lack of a formal business valuation makes conversations about adding shareholders or an exit and retirement strategy difficult. A formal valuation can seem like a lot to commit to, but it is valuable for all types of conversations and gives all your advisors the insight they need to give you the right advice (for example, about insurance, retirement, taxes and so on). – Sammy Azzouz, Heritage Financial Services

13. Cybersecurity

It doesn’t matter who you are or what industry you’re in; hackers want one thing: your data. Take care of your basics. Practice good cyber hygiene and use multifactor authentication. Invest in appropriate security controls, and leverage cloud services such as Google, Amazon or Microsoft as much as possible. – Christopher Konrad, World Wide Technology

14. Fraud Prevention

Fraud prevention is often overlooked by businesses. I hear CEOs (and even CFOs) say, “He/she would never …” yet it happens over and over. The most cost-effective way to limit losses is to prevent fraud from occurring through internal controls, cross-referenced bookkeeping functions, management decisions and financial reports. – Leslie Heimer, American Liberty Mortgage | Stockworth

15. CRM Platform Management

It is very beneficial for a business to fully leverage its CRM platform. You should have a team member who’s dedicated to actively managing it, which includes providing updated reports on customer experience and development. It’s not inexpensive to delegate active CRM management, but the investment can be well worth it. – Ivan Illán, Aligne Wealth Preservation & Insurance Services, LLC

Mark Boardman was invited to write for Forbes council earlier this month.