spend money to make money

Why ‘You Have to Spend Money to Make Money’ is True

You’ve heard the adage ‘you have to spend money to make money’, right? Of course you have! It’s a saying that’s been around for generations.

The meaning of this saying is pretty clear – making money requires financial investments. But is it really true? – You bet it is! But don’t let this old business motto scare you. If you invest your money wisely, the rewards can be quite handsome.

If you are thinking about starting a business, you’re probably wondering what exactly it is that you are going to have to spend money on in order to reap financial gains.

It’s different for every business, but here’s an overview of some of the most common expenses that are associated with starting up an organization.

Commercial Real Estate

spend money to make money office space

Unless you are planning on operating your business out of your home, you’re going to need a space to set up shop.

Whether you plan on purchasing or renting commercial real estate, you’re going to need money to secure the space. The cost of your mortgage or rent will vary depending on your geographic location, the type of building you are using, and whether or not you are buying or leasing.

No matter what the aforementioned factors may be, you need cash for commercial property.

Equipment

spend money to make money equipment

While it’s true that some industries require more equipment than others, every type of business needs some type of equipment.

Whether it’s specialized machines and company vehicles or computers and office furniture, equipment is vital for the function of a business.

You can buy or rent that equipment, but no matter which way you go, you need to spend money to get it.

Insurance

Slips and falls, property damage (yours, your staff, and your customers), workers’ compensation… A lot of risks are associated with running a business. What’s the best way to safeguard your establishment and yourself from legal claims? Insurance!

The type of insurance that you will need will depend on your specific business and industry, but general commercial liability, commercial property insurance, product liability insurance, and workers’ compensation insurance are some of the standards.

Though insurance protects you from major financial losses, you do have to pay premiums for your coverage.

A Staff

spend money to make money staff

If you really want your business to succeed and grow, you’re going to need employees to back you. They can assist with operations, customer service, installations, marketing, and so much more.

Like everything else associated with running a business, the professionals you’ll require depends on your specific needs. Unless they’re willing to work for free, you have to pay your employees, and you need spend money in order to do that.

Vehicles

Perhaps you own a restaurant that delivers food to restaurants, or maybe you’re an interior designer who visits the houses of your clients. If you need to get around to conduct your business, you’re going to need reliable and safe transportation. And guess what? – You need money to get that transportation!

Products

Do you sell products through your company? If so, you have to purchase the products that you will be selling to your clients.

Whether you purchase those products from a distributor or you create them yourself, money is a necessity to get those products.

Affording Business Expenses

Unless you have access to a large sum of money, you’re probably going to have to take out a business loan to afford your expenses.

Calculating a business loan and applying for said loan can help you secure the capital you need.

If your business is a success, you’ll make back the money you spend on your loan.

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