Nearly half of new businesses fail within the first five years of operation, and financial struggles are among the top reasons for closures.
Despite the uncertainty of launching a new venture, entrepreneurship remains on the rise: According to data from the US Census Bureau, more than 5 million new businesses were registered last year.
Insider spoke with entrepreneurs in a variety of fields about the monthly budgets that have led to success, with the goal of sharing insights on business finances. This series, “Founder Finances,” shares tips on how to allocate money, stabilize your team, and prepare for growth, according to founders who’ve done it.
Financing for business launch
Shawn Brown operated CheeseCaked, a Georgia-based bakery, between 2011 and 2019. But, after taking two years off to recover from breast cancer, Brown needed a comeback strategy: Visibility, which included investing in social-media marketing and storefront locations, was her go-to tactic, she said.
“It really helps with brand recognition,” she said. “We’ve become a celebratory space, it’s an experience.”
Read more: Founder Finances: A baker shares the $15K budget she’s using to relaunch her business after stepping away to fight cancer.
Determining your needs as a new company
Diandra Harvin, the founder of the luxury-loungewear company Noite Rose, said she primarily focuses her monthly budget on marketing.
She said she spends nearly half of her monthly budget on public relations services, which help increase brand awareness. She prioritizes this expense because she didn’t have the necessary PR connections that would provide meaningful exposure for her brand.
“You can receive so many benefits from being with a PR firm, which is so different from marketing,” she said, adding that having her products featured by celebrities and in publications has helped her get social recognition.
Read more: Founder Finances: How a 30-year-old entrepreneur uses a $2,000 monthly social-media marketing budget to build a thriving side hustle selling loungewear.
Building company culture in the office
After companies and storefronts closed their doors during the pandemic, many workers saw in-office communities almost instantly stripped away. Although 59% of employees continue working from home all or most of the time, the potential for run-ins with coworkers or in-person meetings brings some allure to office life.
Branden Sewell, the founder of a painting company that booked nearly $500,000 in sales last year, said leasing office space has been worth the cost because it builds team comradery.
“It’s really hard to build a thriving, healthy culture from Zoom or conference calls,” he said. “I’m able to build culture and really have influence on my team, sit in front of them, connect with them.”
Read more: Founder Finances: An entrepreneur booking over $500,000 in annual sales explains why he budgets for office space. ‘I can sit in front of my team and connect with them.’
Investing in employees to retain talent
A record number of employees quit their jobs last year, making the Great Resignation a serious concern for businesses trying to retain talent. As employees search for companies offering incentives like equitable pay, flexible schedules, and benefits, entrepreneurs are finding that investing money towards community building is necessary.
Supporting team members’ interests and goals outside of work is one way to retain staff. That’s how Peter Dufall, the owner of a dog-care franchise called Dogtopia, invests in his workers — he encourages his employees to take continuing education courses on grooming, veterinary tech, and CPR skills, which he budgets for in his monthly expenses.
Read more: Founder Finances: A dog daycare owner shares his exact $58k monthly budget and explains why paying 9% of earnings to the franchisor is worth it.
Planning for business expansion
Like many small business owners, it was Madeleine Park and Jesse Zook’s goal to grow. The duo own seven franchise businesses in the home-service industry together and generated more than $2 million in sales last year. With an expansion in mind, they allocate significant portions of their annual budget to the mission.
“Buying more territory is always going to cost you,” Park, who added that the pair is planning to spend around $30,000 on their next franchise expansion, said. “That tends to be more of a mandatory spend that comes along with growth.”
Read more: Founder Finances: The married co-owners of 7 franchises who booked $2 million in sales share what they spent to grow their businesses.
If you’re interested in contributing to Insider’s Founder Finances series, please contact Alex York at firstname.lastname@example.org.