Aspiring entrepreneurs often ask our consulting firm how to make the best use of their startup investment. During the startup phase while budgets are tight and there are many unknowns, your best use of available funding will always be wherever you will receive the highest return on your investment (ROI). You have to ask yourself which strategy(ies) will yield the most bang for your buck and lead you to generating revenue the fastest.
I recommend completing a comprehensive cost-benefit analysis before you spend a dime of your startup investment. A cost-benefit analysis is a systematic, quantitative approach that helps you to weigh the pros and cons (benefits vs. costs) of a particular transaction. In your case, I would create a chart with at least 3 columns.
How to Evaluate the Best Use of Your Startup Investment
- The first column of each row will indicate the action being evaluated. You would list your options – website, SEO, packaging/branding
- The second column lists the costs of the action as close to the actual dollar amount as is possible to achieve. Request quotes from vendors or perform a little research if you aren’t sure of exact costs. Make sure to consider resources available for successful implementation of the intended action as there are costs associated with this as well.
- The third column should identify the expected results or outcomes (the benefits) of implementing the action. Again, it is important to be as concise and specific here as possible. Focus on how much revenue will be generated (or even costs reduced if that’s a factor) as a result of taking this action. Create a sum total of all benefits associated with any action taken.
Now, review your completed chart and determine which solution will be a) cost the least to implement yet b) generate the most benefits in terms of revenue earned. Since every business model is a little different, without knowing more about your specific situation, performing a comprehensive cost-benefit analysis is my best recommendation to determine the best use of any startup investment. If you want additional assistance with this process, I highly recommend requesting anvia Skype to really tackle this decision head-on.
How did you decide how to make the best use of your startup investment? Did you have a plan? Let us know in the comments below and if you found value in this post, please share it with your networks.