Day after day, you're probably bombarded by the message that you need to spend less than you earn, stay within your budget, just live within your means. Even though living expenses have spiraled out of control to the point simply affording the basics already equals living beyond your means, the general gist still holds up: don't splurge on champagne and caviar if you can barely afford a grilled cheese sandwich, and you should hold off on the things you want opposed to what you need if the money's not there.
But sometimes you just need to well...get over your fear and just spend the damn money on something extremely important.
Underinvesting is one of the most common causes of business failure but is rarely talked about because it frequently gets lumped in with "lack of managerial experience" and "lack of capital". You can be an experienced manager but still have the austerity mindset hardwired into you once you're no longer managing another company's money. You can have capital but use it ineffectively.
American society has a lot of schizoid outlooks when it comes to personal finance, not the least of which is the whole mentality of austerity that leads to a vicious cycle of never being able to afford something better and it's holding you back. If you sign up for my mailing list, the Toad Tribune, and read the free book that subscribers receive, I talk more about this mentality and how I overcame it.
Because while there needs to be more real talk about how much it actually costs to start a business and how to prevent a lot of mistakes that result from going into full-on poverty mode and I plan on doing a "I've shown you mine, now show me yours" post about this to help break this taboo. With that said, most people really confuse being frugal with direly underinvesting in their businesses.
Underinvestment Trap #1: Not Getting a Professional to Do It Right the First Time
Your website is often the first biggest one with this concept. If you do not have the fortune to already be established in some way, then in this day and age you NEED a good site or else you're pretty much dead in the water. You especially need that site to be mobile-compatible.
If you are a good web developer such as if you came from that background or it's something you can pick up in a snap, sure, it could be worth dedicating time to your site to do it all on your own. But for most people this isn't the case. With that whole austerity mindset kicking in, you may be immediately thinking of taking a class or looking at a guide for how to build your own site. While this may be fine for some people, for most people this is a waste of time. Why bother to learn WordPress within 3-4 months when you can just contract out a web developer who already knows what they're doing?
Sonic Toad 1.0 was slapped together over a weekend in web.com, a really shitty outdated host that I only used because I had a voucher from being a Staples Advantage member and just needed *a* website. I knew I wanted to do a blog, get it really nice and flashy-looking, and give it real functionality. So I hired Danny who made the spiffy-looking site you're perusing right now and invested over $2,000 into branding art, real hosting, and Danny's time and expertise. He's a very talented artist and web designer who could do this shit way better than I could, and was a godsend while I was busy trying to build up both Sonic Toad and Himalaya and do the impossible with preparing to close on a condo and move.
This is where that invisible financial planner screaming at you to give up every damn expense but the bare basics would start frothing at the mouth. DON'T LET THIS HAPPEN.
My shitty old website was holding me back because I didn't want to show it to people. Now I have something really cool that I can take pride in, and people are respecting it which is translating to getting more offers for work!
Then you have the super important stuff people try to skimp on all the time: legal and accounting. For the love of Toad please go to a professional for this. I gave a whole litany of resources on Gamasutra of what to do if you cannot afford a tax professional, and will forever link to my book, but if you're approaching the point that you're being spread too thin and are facing migraines from tax and legal stuff: getting a good lawyer as well as an accountant will sting now but save you a lot of grief down the road.
If you work for yourself on an hourly basis or just flat fees, you DEFINITELY can't afford to *not* have a lawyer draft you a real service contract boilerplate.
Underinvestment Trap #2: Thinking a Potentially Expensive Thing is Unimportant
You may have seen a ton of guides all about how you can start a business with $0. Some of the information there is helpful. But about 95% is complete bullshit.
If you don't want to be perpetually struggling, you need to get past the whole mental block of austerity and just go for broke on certain things because they're very important parts of your branding: I'm thinking of headshots, business cards, and other promotional items. Because marketing is always the first thing new business owners skimp on, since experimentation with different marketing methods could merit books of posts and long story short, often requires some financial wiggle room to really figure out what works best for you.
I'll start with headshots. Having professional photos done is not cheap, and I made the mistake of skimping on this for the longest time because I'm pretty camera-shy and horrifyingly unphotogenic. I had a selfie up on my LinkedIn and v1.0 of my site forever, then upgraded to Meh Photographer, then I sprang for CEO Portrait at the dawn of 2016. THEY WERE WORTH EVERY PENNY. If you're like me and not photogenic at all, then trust, that's a sign more than ever that you need a professional who knows what they're doing. And yes, I couldn't really afford it as I was a brand new broke-ass homeowner of barely 2 weeks at the time of the shoot.
I put it on my credit card with zero regrets. Because I barely had my new pictures up for 4 days and already noticed an uptick in my social media engagement and even stuff going on on my Amazon author page. I sold several copies of my book on my last Gamasutra piece and noticed I was also getting faster response rates for consulting gigs and convention applications that required submitting a headshot.
I now have photos I can feel confident sharing, and wanting to share has definitely done stuff for my bottom line. IT CEO Roya Mahboob blogged for CEO Portrait about why headshots are an important investment in your career, I'd highly recommend looking at it whether you work for yourself or not.
It was an expense I thought was unimportant at first. Then I got proved wrong. Don't make this mistake. Affording the photos became a non-issue soon enough.
So next up: business cards. Don't get free cards. They are confusing to the people you give them to, and give the impression that you are a hobbyist and not a professional. If they don't give THAT impression, then they give one that you clearly are not invested in your business: which would justify obnoxious shit like "So-and-so will do it for half the price that you will!"
I got all my beautiful cards for Sonic Toad and Himalaya done at PS Print, and die-cut stickers that are an exact replica of my toad vector at Sticker Mule. These companies are partners and yes, I'll get commission if you click those links, but I only obtained those links because I am super happy with what I got. I rarely see my toad stickers littering the floors at conventions! I get the most compliments on my toad stickers and people love to stick them on their laptops, notebooks, and best of all, the walls of coffee shops and co-working spaces where the Hypnotoad will slowly infiltrate visitors' minds when they see it constantly.
My branding materials were not cheap, but they prove to whoever receives them that I am clearly invested in my business.
One of Sonic Toad's successful clients, Alex Lau of Robotic Potato, also invested a lot into his marketing and boothing efforts at conventions and he increased his subscribership by 150% at MAG Fest!
Underinvestment Trap #3: Putting Off a Major Expense That You Already Know You'll Never Have the Money For
While I don't like being in debt and generally don't advocate it: dude, sometimes you just have to do it if you want to get ahead already.
There's a marked difference between going into debt for something really stupid, or going into debt for something unavoidable like a medical bill. Falling between the two is making a vital investment in your business that SHOULDN'T wait.
The headshots and website were two big ones for me. For you it may be upgrading your computer, hiring a business coach. Getting to major conferences like GDC is another big one if you're a game developer. Sometimes you can't make it to every convention due to money as well as stress and/or not having enough bodies to help you. But try not to put off these vital investments if you can, even if it means putting it on a credit card or going apeshit selling stuff on ebay.
If you're thinking about it, JUST DO IT. You're going to save a lot of time and even money in the long run just going for broke on these super important investments.
Underinvestment Trap #4: Failing to Invest in Your Personal Life
I'm not going to go off on some New Agey crap rant about personal development. I'm going to keep it pretty concrete: don't put off doing something that's going to make your life easier because you can't necessarily afford it.
I'm not saying "Hey, go spend $5,000 remodeling your kitchen even though you'll be paying for it well into three more Presidential administrations!"
But I am putting it like this: if you're already broke and stressed out trying to get ahead, you may as well be broke and ready and able to crush it.
Case in point, I need a fucking vacation. I've been hustling the bejesus out of my businesses, doing my own home improvements (because I like to), and have spells of working all the damn time which was the precise reason I left the 9-5 world.
With my priorities being on home improvements that are making my life as a work-at-home entrepreneur easier (for anyone following me on Twitter, THE DISHWASHER SAGA IS ALMOST OVER!), important business expenses like conferences and dev costs, and my day-to-day living expenses-- no, I can't afford what most people consider a real vacation now. But I can do a little stay-cation, perhaps ending with a weekend upstate maybe, where I just black out from email and social media for a few days. Even if it would put a small financial strain on me, I figure I may as well be relaxed and refreshed after said stay-cation/weekend getaway and ready to crush it upon my return, which beats the hell out of being intensely stressed as a result of having no time for self-care. American society has brainwashed us to be laboring all the time and this is stupid.