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Spending Money to Validate Your Business Credibility

I can't count the number of times I have heard small business "experts" recommend that small business owners buy this thing, or start that service, to "validate their credibility". Usually they hand them and affiliate link to make the purchase, or sell them the product or service directly. I've heard people state that as a reason to build a website, get business cards, purchase an 800 number, get a merchant account, buy a postage meter, form a corporation or LLC, and any number of other costly purchases.

Now, at the right time, and for the right reasons, any of these things might be GOOD decisions. But if the only reason you are investing in it is to "validate your credibility" as a business, don't do it!

The myth is that they somehow convey to the world that you are a serious business owner, regardless of your need for them, or their benefit to your business. IT IS JUST A MYTH!

The thing that validates your credibility as a business, is whether you WORK the business. If YOU take the business seriously, then other people will. If YOU demonstrate integrity, it shows. THAT is what makes you credible.

If you haven't got that, then no one gives a rip whether you have a website, hand them a business card, or have T-shirts with your logo printed on them. Those things mean nothing without a leader at the helm.

The rule is this:

Make purchases based on actual NEED, FUNCTION, and REASONABLE EXPECTATION OF FINANCIAL RETURN.

  • If you are sending out mail every day and the trips to the post office are getting burdensome, then a postage meter can save time -  it is only a wise investment if the time you save is time that is ALREADY costing you business.
  • If you market to individuals, business cards are not only wise, they are a must. If you don't, if your business is strictly online and you never mention it to anyone in person, then forget the business cards.
  • If you have an online business, a website is pretty much required. If you can potentially reach a significant portion of your local audience online, or if they are the kind of people that like to look up your site, research your product or service ahead of time, and then call later, a website is a good investment. But don't invest unless you can see how it is going to actually bring you more paying customers. If the web designer can't tell you that - in a way that does NOT require that you change your business model (for example, that does not require that you ship things through the mail if you are not already doing so), then DON'T BUY! If the designer can't justify the expense in actual reasonable cash returns, they don't know their business well enough to help you anyway. Not every business needs a website. Purchasing one to validate your business credibility is a waste of money, because it won't ever pay for itself. (In general, the combination of website and marketing costs should be able to pay for itself within 1 year - most should do so 2-3 times over.)

Evaluate each expense based on solid business principles. Validating credibility is NOT a solid business principle - it is the mantra of people who don't understand business well enough to give you trustworthy information. Do the math and see if the item really CAN pay for itself, and what it would take for it to do so. If the numbers don't add up, or do not look reasonable, give it a pass, and focus on more effective uses of your resources.

Wise management of your business, and fair treatment of your customers or clients will gain you far more credibility than any nifty gadget or service. They'll get you earning at a profit sooner too.

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We are business professionals, offering suggestions and skills training for traditional business operations methods. We are not lawyers, and we do not offer legal advice. We are not accountants, and we do not offer financial advice. We do share information for some business practices that are sometimes handled by a lawyer or accountant, but which many business owners choose to handle themselves.

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