More and more people are starting up small businesses – I’ve heard that it’s a sign of the times: when unemployment is high (and possibly when unemployment benefits run out) people decide they have nothing to lose so they might as well start a business. I’ve met with several local entrepreneurs to discuss their finances.
I had read that when you first start out in business, you say “yes” to everything and, as time goes on, you start saying “no” more. This was true when I started my financial planning practice Lauber Financial Planning. For the first two years I was advertising and networking and using social media and leaving my business cards in coffee shops; all of which had a cost. I could deduct these costs as “necessary business expenses” on my income taxes, but I still had to pay for them.
If you want to earn money from your business, you have to spend less than you receive.
That sounds so obvious but when you’re trying so hard to make a go of your business, sometimes the sacrifices you make for it seem laudable, as if somehow the business gods will smile down on your sacrifice and deem you worthy of success.
You have to determine what expenditures are most effective, most enjoyable, most necessary; just like you do with your household finances.
You must distill down what is necessary for your business to thrive.
Personally, print advertising doesn’t do anything for me, but if I’m quoted in a newspaper article I get calls all week.
Social media doesn’t directly lead to business but, since most people find me via a Google search, since I use so much social media, I pop right up in the results.
Networking doesn’t work for me either, I think because finance is so very personal. And how many times does someone walk into their accountant’s office and say “I need a financial planner?” I might as well buy a lottery ticket. I still go to some events because I like to socialize but I’ve given up on the rest and instead save the money to recover a fabulous antique loveseat I got a thrift store for $13.00.
So don’t focus so much on whether or not you can deduct certain expenses, but whether or not they’re worth incurring in the first place.
The price of anything is the amount of life you exchange for it. ~ Henry David Thoreau