Where You Should Spend Money In The First Year Of Your Startup


Congratulations startup founder! You’ve passed the ideation phase and you’re ready to take those brilliant ideas and turn them into not only a viable business, but a highly scalable one. I wish I could tell you that the hard part is out of the way, but I won’t start our relationship off by lying to you. The first year of your startup is going to set the pace for your growth, so you’ve got to make some smart choices right now. One of the biggest decisions you’ll have to make is where to invest your (small) budget to create the most impact.

We’re not dealing with typical start up costs for small business here. Where the average small business owner is worried about rent, inventory, and staff, your startup costs will look much different.

Let me preface the following tips by saying that where you spend your business budget in the first year of your startup will heavily depend on your goals for that startup, but this is a good place to begin.


Once your idea is ready to go, you likely need to create samples of your product or you need to hire developers to make you an app. By and large, development is going to be your biggest expense. From materials to team members, you can’t skimp on this expense because getting a high-quality end result is going to be essential to scaling your company down the line.

Let’s be clear: we’re not looking for perfection here. You’ll likely have to launch your startup before you feel truly ready, but you absolutely must be spending your startup costs on development in the beginning—and although the amount you’ll have to spend will be less, you’ll need to continue to invest in development throughout the life of your company.

Legal + taxes

Legal fees can be pricey, but as a startup founder, you need to protect yourself and the business for whatever scenarios you might face along your journey. Start with the basics: spend some money to form an LLC (or S-Corp or whichever business structure you decide is best). Then, be really thoughtful about how you spend money on legal fees.

Need an accountant? Well, there are lots of free softwares for business accounting online. Going into a partnership? You absolutely need legal counsel to insure both parties are protected.


The age old adage “It’s all about who you know” holds true when you’re starting up a business. You could be the most driven, talented individual in the world, but you simply can’t do this alone. You’ll need to tap into your network to find trusted contractors to work for your startup; you’ll need people who believe in your idea to spread the word; you’ll need people in your industry or in positions of influence to open doors for you.

If you’re not already well connected, you need to become well connected. (Whether you like it or not.) It is wise to spend money in the first year of your startup at big industry events or conferences where you’ll have the opportunity to shake hands with people of influence and broaden your network in a meaningful way.


I’m a marketing director for startups, so you had to guess that marketing was going to be on this list, right? The hard truth is that too many startup founders won’t invest in marketing right away because they aren’t ready to sell.

Well, if you’re not creating community and exposure of your brand, do you know what happens when you are ready to sell? Nothing. That’s what happens: nothing.

Not only does it take time to build up trust with your potential customers, refining your target market, getting clear on your marketing messages, and even branding all take time. (And the time to start figuring these pieces out is not when you’re trying to sell to someone.)

So long story short, you’ve got to start marketing before you think you’re ready. You can do this by being active on social media, setting up landing pages for a waitlist and collecting emails, and lots of other cost effective ways—as long as you’re doing it.

Furthermore, if you’re going for any type of funding, investors are going to want to see more than just your brilliant ideas—they’ll want to see a plan for how you plan to acquire new business. (And that’s marketing, folks!) So having a plan and a budget in place for marketing early in the game is essential no matter the route you take to funding.

What are your goals?

If you’re here, you are likely not the average entrepreneur: you don’t just want to start a business, you want to scale it. What you do in the first year of your company matters, and you’re going to have to spend money to move the needle forward in a tangible way. It’s important to be conscious of places where you can save, but definitely don’t cut corners. Make sure you create a budget for development, legal fees, growing your network, and marketing so year one of your startup propels you into a highly successful year two.


Meet the Author: Shauna Armitage

Shauna is a Marketing Director or Fractional CMO helping early-stage startups scale with effective strategies, creative solutions, and unparalleled integrity by making the most of small budgets for maximum impact.

As a vocal advocate for women in business, Shauna is on a mission to redefine what it looks like to be a working woman and to support other women doing the same. She spends her free time traveling with her husband and four kids while drinking Coca-Colas. Connect with her on Instagram at @shauna.armitage.

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