Spend money to make money - the newbies guide

This post will be more for the new people than those that are established, but I think it's something that isn't talked about that much so I wanted to make a post. Keep in mind this post is coming from someone in a first world western country (Canada) so that it might have some inherent biases in my way of thinking.

So we have all heard the phrase "you need money to make money", and most people go 'OBVIOUSLY!' - but these people are often thinking large scale (ie: I need 900k so I can buy an office building and rent it out, wouldn't that be nice?). However the reality is most of us don't have 900k, but that not a big deal because all you really need is a smaller amount of money - but you must be willing to spend it (to get a return), and hopefully work up to that 900k.

My first foray into the online world of money making was dealing with those 'pay per download' websites years ago, I wont get into that but just to give some grounding. From there I went through several transitions (selling electronic cigarettes online & offline, adult websites, etc) to get to where I am now running a local 'Web design and development firm' <- it's just me and some outsourcing.

The one thing I have learnt on my journey (which is still in its infancy) is that spending money wisely can be the best decision you ever make. A lot of us when we start out try to scrimp and save every penny, ie: making a shitty looking website instead of just getting a very nice template off themeforest.net for like ~20 bucks (a side note: editing a well designed template is by far the best way to learn good design techniques). The thing I have noticed now is that a lot of the purchases we make online to improve our businesses are rather small compared to offline expenses (ie: $25/month for a lynda.com tutorial subscription vs. 30k for a comp sci degree).

Now to the relativity of the money. As my business has grown over the last 3 years (from 3k net first year to ~65k this year) I have noticed that I am now willing to spend more money on things that will save my time or provide my clients more value. I still have the same mentality that I must be willing to spend money on my business but the amounts of money I am comfortable spending have increased. I guess this could be easily chocked up to "Yeah, but that's because you have more money now" - and while this is partially valid, it is still directly related to having the mentality of 'spending money to make money' <- and most importantly learning trial and error with smaller amounts of money. Having this mentality also can help you relate to successful business people, especially when you do web design/development like I do. Most of these people realise that good work costs money and they don't have a problem spending 10-30k on a custom database for their company if they feel they need it (and I learnt the required PHP & MYSQL skills from a $25/month lynda.com tutorial).

With this being my mentality I often see people, in my everyday life, trying to start businesses with no money - often stating 'I don't have any money to put into my company'. However these same people have no problem going to the bar to spend $50-$100 on drinks, this relates directly back to the mentality - these people just don't get it. I can understand that it's hard to invest money into your business when you have limited funds, but the reality is this is the best thing you can do with your money if done wisely (and even if it isn't done wisely, at least you can learn from your mistake). I am not saying go out and buy every WSO (in fact I have never even bought one), but do get into the mentality of spending money to increase the value of your business. If you see something that will save you time, or give value to your clients, then buy it! you will quickly learn how to weed out the garbage from things of real value.

The most important thing I can say if you are just starting out is don't be afraid to spend a little money at first. The value you get from the things that work, and the knowledge your learn from the things that don't, are what will make you successful in business and separate you from all the other people.