One question that entrepreneurs often grapple with is about where to invest in their business. Especially during their early stages, most ventures face the challenge of having to allocate limited capital to different elements. This article is about my experience of prioritizing investments for LS International, the executive search firm I founded in 2015. Like all new ventures, I too needed space to operate from. I needed communication and computing devices and connectivity. I needed money for Business Development, which in the executive search business meant traveling to meet prospective clients and candidates.
Prioritize in the context of your business- invest in what really matters
A key learning during the first year or so was to avoid the temptation to spend money on what might seem important, but really wasn’t. I initially worked from my home office, so I had more money for the other bits. I chose to make initial investments in five key areas that were important to my business at that time:
- Technology: I knew I would spend a lot of time on the phone, speaking with candidates as well as clients and potential clients. I decided to buy a top of the line Sennheiser headset. Could I have managed with something less expensive? Yes, but personal comfort is important when you work sometimes for 10+ hours a day. I needed a reliable and sturdy laptop, which is what I got myself. My business was all about maintaining a secure and scalable database of candidates and clients- so that was another investment. Nothing fancy, but functional for sure. And yes, I invested in anti-virus software and other security features that would keep data safe.
- Information: LinkedIn professional access was vital- so that was a no-brainer. I invested in subscriptions to well-known business newspapers such as the Financial Times and the Wall Street Journal, which gave me access to news about people, companies and of course, information about different segments and markets of the consumer domain. As someone whose business revolved around identifying the best people for my clients, I had to be well-informed about their businesses so I could understand their needs and gauge candidates’ experience. Speaking your clients’ language is invaluable.
- Self-development: Any business, but especially a services business, is only as good as its people. And when your venture initially has a staff of one- i.e. you- it’s critical that you invest in developing yourself. One’s background may equip us with certain skills, but as an entrepreneur, you need a whole lot more. Like managing a P&L, or building resilience in the face of failure. As young, first-time entrepreneurs usually are, I too was vulnerable to self-doubt. Invest in the right coach or mentor- and believe me you won’t regret it. I found Judith Sanz, my first mentor, through the Barcelona chapter of the Professional Women’s Network (PWN). I owe Judith a huge debt of gratitude and I can say with confidence that had it not been for her mentorship, I would not be as successful as I am today. Thanks Judith!
- Travel: In our business, trust and confidentiality are vital. And building trust by meeting people face-to-face may be old-fashioned, but you better believe it’s still the best way to do it. Chemistry is a big part of relationship-building and that needed me to meet executives at client companies as well as candidates. And remember that this critical process can only be done one meeting at a time!
- Thank you’s: In a world where more and more simply gets taken for granted, tangible expressions of gratitude stand out. Again, nothing fancy or expensive- just a little something that shows you care enough to say “thank you”.
Beware of investing in things that are not really vital or essential
The ABC analysis or categorizing cost elements/features into what’s vital, essential or desirable applies to entrepreneurial ventures too. Like I said earlier, I needed a good workhorse laptop- not necessarily a top-of-the-line MacBook Pro. Office furniture is another big-ticket item that can dent your budget and not deliver much ROI.
A website is essential. But in the early days, a simple but informative website is more important than a fancy one with bells and whistles (that’s also more expensive to develop). Closing the deal needs personal meetings, presentations and persuasion. Your passion and hunger cannot be better conveyed via your website, no matter how good it is. I resisted the urge to splurge on a fancy website. I chose a simple design and wrote the initial copy myself (Although I admit I am a far better executive search professional than a copywriter!). I have made many updates since then, but I am sure you get the point.
Constantly evaluate priorities as your business evolves
As the business grows, your investment priorities will (and must) change. Prioritize what kind of people you need- those with complementary skills or those who possess overlapping skills so you can delegate some tasks and focus on areas that need more attention. But as you hire people, you will need a proper office. Clean, well-lit offices and meeting rooms with functional and comfortable furniture are important- expensive artwork on the walls can wait.
As you hire people, make sure you scale up your technology backbone (hardware, network and software) too so that everyone can access systems securely and the risk of viruses or hacking are minimized. A good quality printer and a projector may be worth the investment, as also investment in faster/better connectivity.
Marketing and brand-building is usually a major area of investment for businesses when they get to a certain stage. But be smart about where you invest- and be clear about what you’re getting in return. Utilize digital channels to push rich content (e.g. LS International’s podcasts and articles), while using speaking opportunities at events to create personal visibility and awareness for the company.