Small Business Budgeting: Where to Skimp and When to Splurge

In early 2018 Texas-based restaurant Rockfish Seafood Grill made a surprising menu change. They upgraded their Alaska pollock to cod and their tuna steak to Saku block sushi-grade tuna. The higher quality fish costs the chain more the twice what they had been previously paying. So why did they do it? Because the better fish expanded their offerings and menu options and has been hugely popular with diners. Sales are booming. In business, sometimes it's better to pay a bit more than to save money but sacrifice quality. Click To Tweet

Small Business Budgeting

There are many times when business owners will be faced with the dilemma of whether to skimp on something or pay for better quality.  Everyone wants to save money, but there are instances when paying that little bit extra could result in a better investment. 

Skimp

• If you don’t plan on using an item or service very often, it’s probably okay to opt for the least expensive version.
• A beautiful office doesn’t have to be pricey, so if it’s between a $2,000 desk and a similar $8,000, opt for the less expensive of the 2.
• With more and more employees working remotely, it simply doesn’t make sense for most businesses to lease a large and expensive space.
• Purchasing equipment that customers won’t see is a good opportunity to save a little money by getting a similar, but a less attractive model.

Splurge

• When it comes to equipment or materials your employees or customers use regularly or depend on, pay for quality.
• A product or service that’s complex is usually worth a little extra money to ensure it works well and integrates with your current set up.
• If you’re a relatively new business, don’t be too cheap when it comes to your marketing budget. You can reevaluate once you’ve established your brand.
• Most businesses need legal and financial guidance or advice. When it comes to laws, regulations, contracts or audits, splurge on a top-notch service.

Keeping Customers In Mind

There’s a fine line between saving on services or materials and selling your customers short. Can you imagine what would have happened if Rockfish Seafood Grill had opted for a cheaper fish than they were already serving? They would have saved money, but probably lost customers. When budgeting, your goal should always be to get the best possible deal on the highest caliber of service or materials to deliver a winning product. This will keep customers happy and profitability up.
Contact Us to learn more about brand management and marketing for your small business.