The Non-Negotiables Of Startup Spending

A large responsibility that a founder undertakes upon taking the reins of his/her startup is deciding how to manage its money. There are so many buckets that a startup’s funds can be invested in and it’s challenging to figure out which buckets should be prioritized when it’s time to distribute funds (especially when funds are tight). 

Regardless of your startup’s industry, there are non-negotiables and core spending categories that should always be met in order to preserve the health of your startup. They are the core pillars that sustain and protect a startup’s sound operation and uphold the company’s quality when it comes to its product, customer relationships, and future growth —

Team Pay

Setting a precedent of fair financial exchange for labor is important for morale and long-term sustainability. Even if it’s a stipend because the budget can’t sustain full-on pay, the gesture is important for team members to receive, and an important habit for the company to get into.

I have never met a startup team that functioned at maximum effort past 6 months without pay. After 6 months of no pay, you see a sharp decline in one’s ability to deliver work that’s high-quality, on time, and/or unique. You end up seeing a lot of work that’s more of what has been done before, and nothing that’s new or helping the startup push its boundaries and grow.

It’s really difficult for even the most passionate team member to give their all if there isn’t a financial incentive. Even for team members who are working for equity — it takes a specific type of person in a pretty sturdy financial situation to truly work at maximum effort for the long-term without immediate pay. There are not that many motivators that are stronger than money, especially when it comes to a long-term push — it’s one of the few tools we possess that feels like a fair exchange for our time and labor.

Your team is at the heart of every interaction and output that leaves the company. If your team is not happy, it’s very likely that everything that’s produced by the company won’t be interesting, premium, or competitive. If you continuously let this happen for several months, your startup will eventually be known for delivering mediocre product and service, all the time. In a competitive and saturated marketplace, this will lead to a slow, but sure startup death.

Lead Generation 

I view lead generation channels as the coal that fuels the ship (so to speak — I know that ships aren’t fueled by coal anymore) — the more leads you pump into your startup, the more smoothly the whole ship will run.

Whether you’re putting money into lead generation channels or are spending your time (which ends up funneling into the “Team Pay” section above) operating lead generation channels, there should be a significant investment here. If your startup does not have a system in place to generously find and cultivate leads at all times, there will be fewer opportunities to produce sales on a monthly basis. Without the consistency of monthly sales, your startup may as well not be open.

Assistance For Busy Work

One of the key distractions that capture the attention of many startup founders is busy work. Whether it’s engaging in a never-ending chain of email responses, administrative work, or non-essential tasks that can be completed by someone else, busy work is work that needs to be completed, but not by you!

Busy work is attractive because it’s easy to complete, and can be used as an excuse to not work on the high-value tasks that only the founder can complete such as sales calls, investor pitches, etc. We avoid and feel fear around these high-value tasks because rejection is a high possibility. However, by neglecting these tasks that only the founder can complete, founders lose the opportunity to step up and elevate their startups.

Whether it’s by employing AI, assistants, or interns, founders should export busy work so that they can focus on the high-value tasks that only they can complete. There are way too many affordable and diverse options nowadays that there’s no excuse to let busy work be a significant lure on your time. Put the time and/or money to set up the systems to give your busy work to someone or something else so that your time can be invested in your startup’s growth.

Customer Service 

Customer service departments for brands are now more crucial than ever due to Millennials’ strong prioritization of customer service when choosing to do business with a brand. 68% of Millennial consumers have stopped doing business with a brand due to a single negative customer service experience — as a demographic whose global spending power will soon be greater than any other generation, it’s in the best interest of startups to put customer service at the forefront of their priorities.

Again, there are way too many affordable and diverse options nowadays that there’s no excuse to not be customer service-forward. Whether it’s by employing AI, services like Zen Desk, or hiring a freelance team of service members, serving your customers is an important and worthy investment.

Profit Saving

Setting aside a portion of your startup’s profits for either an emergency or investment in the company’s growth is a no-brainer and should be implemented ASAP. Whether it’s 1% or 10% of your company’s profits, starting this habit and getting in the motion of setting aside any money is completely feasible once you’ve set up the system to make it happen. Mike Michalowicz’s book Profit First does a great job of explaining how to set up a system to put aside profits for your company every month with ease.


The majority of the time, the next stage in a startup’s growth requires a significant financial investment to take it to the next level. It’s much easier to have this needed financial capital available from consistent saving, rather than entertaining the idea of investors, fundraising campaigns, etc. By letting go of a little bit of your financial capital today, you empower your startup to make big moves in the future.

For more startup support, grab my Pitch Deck Checklist or my ‘Find Your Customers’ worksheet to fine tune your pitch deck or marketing strategy. 

Sophia Sunwoo