We hear it everywhere online: “Invest in yourself.” Sounds good, right? However, often the people telling us to do this are most interested in us investing in their particular product. By leveraging our desire to be the best entrepreneurs we can be, they convince us to drop inordinate amounts of money into their bank accounts. Sometimes these investments are blessings and repay us tenfold. However, other times, we are left down and out with no new knowledge and much lighter pocketbooks. Here are 5 questions that I like to ask myself before making new investments in my business development.
1. Is this investment at, above, or below market price?
Before you hit “add to cart”, do a quick search and see who else is offering this product or service. Figure out what the average price point is in that particular industry. Prices far above market average are cause for concern, unless this package offers something that is extremely specialized. Prices far below market average, however, are also a cause for concern. We get what we pay for, and often rock-bottom price tags indicate a gimmicky or illegitimate product. Aim to strike in that monetary middle ground where you get a good deal on a great product.
2. What does this investment offer that similar investments do
Every business brings a different perspective to their products. Consider the seller’s experience, level of professional training, potential biases and blind spots, and communication style. No product is going to be perfect, and many will be similar to each other, but there is always something that sets one offer apart from the rest.
3. Will this investment pay for itself?
It’s poor business sense to invest in something that isn’t going to benefit you financially. Consider the usefulness of the knowledge or service that you are thinking about investing in, and weigh it against the cost. If you have a service based business, it’s helpful to consider your average hourly rate and calculate how many hours of work it will take you to “pay off” the potential investment. If you sell products, consider how many products you will have to sell to reimburse yourself. Then assess how the investment you’re considering will help you to make up those hours or products above your existing baseline.
You should never invest in yourself and your business if it won’t provide a tangible financial kickback. You’re running a business, not a charity.
4. How necessary is this investment right now?
Timing is important. The most sustainable growth is organic, and businesses that are rushed to “succeed” often flame out quickly and dramatically. A particular investment may be good for your business someday without being necessary in the first six months after you hang your shingle. Don’t bend to sellers who run gimmicky “limited time offer” sales, either. Good businesses know that their products speak for themselves and they don’t need to pressure you into making a snap decision.
5. Do I want to support this seller?
At the risk of sounding terribly woo-woo, money is energy, and we have a responsibility to give our money to businesses that we want to see grow and flourish. Especially when you’re buying from small businesses, every dollar matters, and ideally you should give those dollars to people with who you feel connected to and that you vibe with. There is also a moral obligation here to support people who will go on to patronize other businesses and causes that you feel kinship with.
Making the choice to invest in yourself and your business is a necessary part of entrepreneurial growth. However, none of us have unlimited budgets, and most of us are operating on a shoestring. Make the money you do have work for you by carefully considering the costs and benefits of every cent you put into your business. If you are careful and considerate with your spending, your bottom line will thank you.