When is the Right Time to Invest in Software for your Business?
Over the years we've experimented with tons of tools, services, platforms - you name it - that are meant to help our business grow and a HUGE part of our consideration with each one has been how much it costs. Just like you, we're a small business and we don't have oodles of cash to pour into every one of whims and that's probably a good thing because one of us has a serious penchant for cat-themed things and its meant we've been really diligent about exploring every one of our options before we commit.
If you're stuck in that, ‘I need this, but paying for it means blowing up my budget, but I'll never grow my business without it, but what if I can't afford my rent because of this’ limbo, then let us be the first to say, we hear you! Those are all super genuine concerns and they're all ones we've had too, but we have found ways to feel more comfortable and assured with those decisions, so we're sharing our process so, hopefully, you can too!
START WITH WORKAROUNDS
Before we commit to any tool we start with the free version or trial. When we say "free" version, this doesn't necessarily mean an actual version of the exact tool or service we want, it could just be a freeware, open-source adaptation of that thing.
For example, if you were thinking an inventory tool might be helpful to you, you could try downloading one of the many free apps or online tools that does this before you go and pay a company like Asset Panda for their full suite. We like to call these workarounds, because they may not be the ultimate, most perfect things in the world, but they come somewhat close to doing the trick and they let you "prove your model" so to speak. What we mean by that is they let you see whether that tool, service, software, whatever ACTUALLY makes a difference to your business.
During this evaluation time it can be helpful to keep the following questions in the back of your mind too:
How often do I end up using this tool?
Is it creating efficiencies or making my life considerably easier?
Does using this tool have any financial advantage for my business? Ie. Am I able to take on more work or hire fewer people because of it? Will this create a better experience for my clients? Could I charge more or have less wastage if I had this?
Are there additional features you need to make this tool really functional for you or do the free ones suffice?
What we've found is that by going through this process and asking ourselves questions like these, we're able to better justify a purchase in our minds. We know it's helpful, we know we will use it all the time, and we know that, despite its cost, its net effect will be financial gain, so taking the plunge feels less like jumping into cold water and more like visiting a nice spa. If you find you can't answer any of those questions positively though, then you probably don't really need that tool and it would just end up being a waste of money.
And, honestly, if you can't say that tool is going to have a long term positive financial impact on your business then that, in itself, should be a big red flag for you - although there can be exceptions to that rule so weigh out your reasons for wanting it in a big ol' pro vs con list if you have to.
Finally, make sure you think of your own time in terms of dollars and cents too when you're doing this evaluation and consider your opportunity cost if you don't have that tool. This a good way to quantify things when it feels like you’re comparing apples and eggplants.
PAY MONTH-TO-MONTH TO START
Some tools and services won't let you do this or it might be cheaper to sign up for an entire year rather than paying month to month, but, if you can, we suggest signing up for the month-to-month option.
Make sure you read the fine print too to make sure that you can cancel at any time and you're not locked in for the entire year if you go this route. By doing this, you'll be giving yourself some more flexibility to cut costs down the road if you need to and you won't be trapped paying for a tool that you find you don't need that much or that you grow out of.
Set yourself a date in your calendar as well, about six months after you sign up for the service, to remind you to do an evaluation on it. When that day comes, sit down and do an honest assessment. Ask yourself the same questions as when you were using a workaround, and then you can make a more informed decision to switch away from the month-to-month to the (cheaper) full year contract if that makes more sense.
TALK TO YOUR TEAM & SURVEY YOUR CLIENTS
If you have a team, then involve them in your decision-making process. Just because you love a tool and use it all the time, doesn't mean they do so before you commit to anything get a general consensus from everyone around how useful that tool is to them. They might have other ideas as well about how you could achieve something or have seen other tools that are cheaper or more functional, so it's never a bad idea to crowdsource before you choose.
Similarly, you can ask the same of your clients. For example, if you're considering a new client management platform, like Dubsado (fyi, we're an affiliate), you might want to survey your clients to see what issues they have with your existing platform or your existing process. Maybe they don't have any issues or maybe their issues won't be solved by the tool you’re considering. All of this is good information to have on hand when you're making choices like these.
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INVEST IN YOUR GROWTH
Sometimes you need tools before you can technically afford them and that can be super frustrating. That said, running a business is a pretty risky endeavour and sometimes you just need to bite that bullet and spend what you don't necessarily have. Does seeing the amount of money you owe on your line of credit feel gross? Oh yea!
But, if this service is what your business needs to get to the next step. If it's going to be the thing that lets you take on more work or provide a better service you can charge more for then it's definitely worth the chance. You can take lots of steps to mitigate your exposure, like the ones above, but at the end of the day some things are still just risks and there isn't much we can do about it.
At the end of the day, we suggest that no matter what you choose or don't choose, you stay open-minded and flexible. The main goal for most businesses is growth and every time you do grow you're probably going to need to evaluate whether your systems and tools are still functional or practical.
We've gone through lots of iterations of tools and services over the past few years and, while we feel we've hit our groove with a lot of them now, who knows what a year from now holds. Just because we're really dependant on something now, doesn't mean we'll need it tomorrow and that's the reality when you're in your first few years of existence as a business, so there's no point in being too rigid about things. It will only cause you heartache.
Finally, we just want to say as well that, if you're literally just starting out, persevere with the workarounds for as long as possible. There's seriously no shame in using them. We still do and there are lots of big businesses that make millions of dollars in revenue a year that do too.
Like we said before, they'll only help you prove your model and, when you're able to do that, it becomes SO much easier to be confident investing more money into what you're doing.