How do you know when to spend money on your business?

After investing very little in my business for years, these past few months I have started making a lot of business-related purchases.

From software to home office equipment, I’ve spent more in the past few months than I had spent in a very long time for my business! 

And this is important: you have to invest in your business to help it progress. The question is, how do you know what you should spend that money on? How do you know this thing is worth it?

Here are 5 questions you should ask BEFORE you make that purchase:

1. What will this thing do for me?

Will it save you a bunch of time? Will it streamline your processes? How does it relate to your business plan and goals?

Understanding the real, tangible benefits to it will enable you to more clearly determine whether or not it’s a good fit for you at this point in time.

2. Why do I want this thing?

Be careful about this! Sometimes we get so excited about something that we just want to go ahead and buy it without thinking whether it’s right for us. Just because someone else found it valuable doesn’t mean it’s a good fit for your brand and your business. Take a step back and think critically for a moment about why exactly you want this thing.

3. What will my business and life look like after I’ve purchased it? What would it look like if I DON’T make the purchase?

If this thing will save you huge amounts of time, for example, then isn’t it worth a few dollars? What could you do with that additional time you’d save?

Consider too if the thing you want to purchase will enable you to connect more directly with target audiences (such as a networking event where your audience will be) or if it will give you more professional legitimacy (such as a website with your own domain name) and so on and so forth.

I like to think in terms of how much I would need to work to make the same amount. If I’d only need to work for a couple hours to pay whatever it is I want to buy—be it software or an event or home office supplies—and this thing has the potential to get me upwards of 10 hours worth of work, then it’s probably worth that initial investment.

4. Do I have the funds for it?

This is a question that is important to ask from both sides of the equation. It’s a problem that I’ve noticed is particularly prominent in the professional blogging community: many new professional bloggers either spend all their money on everything they can find to help further their business, or they don’t want to spend a single penny.

Both can be problematic: you of course need to fit within your budget! At the same time, if you want your business to succeed but you lack in a specific skill or you need to free up your time, for example, then it will be a huge benefit for you to invest in an area that will enable you to learn the skill or hire someone else or get automated systems set up so you don’t have to do things manually.

5. Is there any kind of urgency?

If your computer is starting to break down, now is probably a good time to start looking for a new one. Do you really want the hassle of trying to find a new computer after your current one has broken down?

Similarly, if there is an amazing conference or workshop that you want to attend and it’s only available at a certain date or time, you might want to jump on that. If it’s not super urgent and there are other things you need to prioritize (and you can only fit a couple into your budget), then keep a running list of things you’d like to invest in so you can return to your list at a later date when you have additional funds.

A final note…

As I said earlier, you want to be careful to ensure that your purchases fit in your budget! But that being said, you do need a budget. 

Investing in your business is important for long-term gains, and you don’t need to invest tens of thousands of dollars in your business. In fact, many online businesses can be started with less than $1,000 as the upfront investment, assuming you already have a computer and an Internet connection. A few other carefully chosen purchases around $100 each can make your business skyrocket!

Want help with starting (or growing) your freelance business? Check out my online courses in the SaganMorrow.com School.

There are options for every budget!

What questions do you ask when making a purchase for your business? Do you find that you fall on one end of the extreme or the other? How has investing in your business made a difference? Share in the comments section below!