MBA1810 Q&A Wednesday: Am I spending too much on tools and software?

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Hey O welcome to the 100 doll RBA show, your go to Business podcast delivering daily business lessons. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014.

And today's episode is Q and A Wednesday.

On Q and A Wednesdays, I answer a question from one of you, one of our listeners. If you have a question you want to ask, just email me over at Omar MBA Net. Today's question is from Craig and Craig asks. I was recently looking at my P and L sheet thanks to your advice and realized that I'm spending over $8,000 in software and tools every single year. Between Infusionsoft, my membership software, my shopping cart, and a whole bunch of other little finicky tools, I was shocked to see that I'm spending almost ten grand a year on subscription products to run my business. Am I spending too much? Should I simplify? Should I be spending less? Would love any advice on how to attack this. Thanks so much Craig. Great question Craig. Many people sign up for a lot of services and kind of feel like, hey, am I using these services? Am I using my money the right way? Should I swap these services out with different ones? Will my business be affected if I canceled some of these. Well, I'm going to be answering all these questions because we always prune our suppliers list and it's all about understanding what you're paying for and how to use it. I'm actually going to show you. I'm actually going to share with you the most important pieces of software or subscriptions you should always be paying for and paying top dollar for, as well as the ones that you can live without. So let's get into it. Let's get down to business.

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So Craig writes in and asks, hey, am I spending too much on software and subscription tools? I spend over eight grand every single year on these tools. And I want to first say that $8,000 sounds a lot when I just say $8,000. But it's all relative really. It depends on how much you're earning, depends on how many customers you have. It depends on the nature of your business and how it uses these tools. If you're spending eight grand a year, but with those tools you're earning 100 grand, then it's not a bad thing because those tools are basically your running costs to run a business. You might have other costs involved, but most people that spend money on an online business spend spend most of their money on tools and hosting and things like that. Again, I want to stress the relativity of this. All $8,000 does sound like a lot. But our software business, between hosting and development, SaaS products and deployment tools, and email marketing, we spend well over $100,000 a month on tools and subscription services. But again, it's all of our costs because we run a software company. First, I want to talk about what tools really are worth spending money on, and then we'll talk about how to maximize these tools. So before you start cutting out, let's see if some of these tools are the things that you actually should invest in. Number one, your website hosting. A lot of people go really cheap on their website hosting, whether they're on a shared server or they're on some sort of dinky hosting plan. Spending a bit more on your website hosting and having a dedicated server is going to speed up things. It's going to allow the website to load faster or have a better experience for your customers. It's the home, it's the home of your business and you need to make sure you're spending good money on a good foundation. A lot of people forget this, skip this and spend really like less than $10 a month. That's okay when you're just getting started to have a proof of concept, but once you have customers rolling through the door, you need to improve and upgrade your experience. So spending money on that is not so bad. Most people spend $10 on their website hosting because we really value the experience for our customers for our websites. We spend $600 a month on website hosting to have a virtual private server. This keeps us more secure, keeps the uptime high and the reliability high. So it's worth investing in this. Number two, your email marketing provider, your CMS. Whether you're using Infusionsoft or Mailchimp or ActiveCampaign or ConvertKit, whatever it is, this is actually a good investment because a lot of your communication with your customers, non customers marketing, is going to be via email and you want to make sure your deliverability rates are high, that people are actually getting your emails and they're dropping in their inbox. Now, when it comes to email marketing tools, you can have something like mailchimp, that's quite affordable, or sendfox, which is really affordable but is very basic and may do the job for your type of business. Or you can go a little bit higher end like ConvertKit or ActiveCampaign, or you can go really top end like Infusionsoft or even Salesforce and those can get really pricey. The question here is, are you using all of that power? Are you using all of those features? If not, before you decide to cancel and switch over, because that has a cost, you know, a lot of time, a lot of effort to move everything over and migrate to a new software. Before you even consider that, ask yourself, what do I need to do to utilize a lot of the great features that I'm paying for? Maybe I can grow my business using these features. You can literally just call them up or get on, chat with them and say, hey, I'm spending X amount of dollars every single year on your service. I don't think I'm getting the most out of it. I'm considering canceling. But before I Cancel. How can I utilize all your features to grow my business? You can literally just ask them that. And they will be running to give you advice and give you blog posts and tell you what to do and tell you, hey, we have this feature that will allow you to do XYZ and like, hey, I can do that with my next promotion. The point here is that you might be paying for things you're not getting an ROI for. Get the roi. That should be your first step. See if you can make more money, get more sales, get more traffic through the tools you already are using. Especially when it comes to higher priced things like email marketing. Anything that comes to branding or your appearance as a business really should not be cheap. You shouldn't be going cheap cheap, I should say. Here's a good example. A lot of people might opt to not pay for video hosting and they'll host their videos on YouTube and embed their videos on YouTube on their website. And these are including their marketing videos or tutorials. And the problem with that, of course, is when you watch a YouTube video on a website, at the end of the video it will pop up all these things that say, hey, watch this next video. And it's basically just YouTube's algorithm recommending that viewer to watch other videos on YouTube because hey, it's free. That's not a great experience or a branded experience for your customers and it's actually going to drive them away from your website. It's actually not a really good idea. So choosing to pay for video hosting and paying for a Wisti account, for example, is what I recommend. Or Vimeo is going to make your website look a whole lot more professional. It allows your customers to stay on your website and only be aware of your business and your content. So don't go cheap on that stuff. Invest in that. That's really actually a good thing for your business. Again, if you're just starting out and you haven't made any sales yet and you want to go the cheap route and go with the YouTube, that's fine. But if you have business and you have customers and you want to make a good impression or you have the budget for it, I recommend going with something like Wistia and embedding some really nice video players using Wistia. Now where can you go cheap? Well, one way you can save a bit of money is your domain names. Depending on where you register your domain name, you can be paying 10 times as much than you should be. Sometimes when you buy your domain from your host, like Squarespace or something like that they'll charge you a premium to just renew your domain name. $50, $60, $100 a year. What I recommend and what I've done recently is transfer all your domains over to Google domains. I love Google Domains because it's really affordable, it's really cheap, they include privacy for free and it's very competitive. So I can easily renew my domains at a very low price and I control all my domains in one place. Another tip I want to share with you is that any tool that directly makes you money is a tool worth having. So like your payment processor, like a dunning service, like Stunning, for example, or ProfitWell, or their tool called Retain, which helps you recover Delinquent Churn or Delinquent payments. These people are making you money with their software, something like adespresso that helps you optimize your ads so you can spend less on your ads. These tools have a direct ROI and you can see the value right away. So try to spend more money on those things because you can see more direct impact. Now you want to prune your costs, you want to make sure you're not spending too much. List all your tools on a spreadsheet, list how much it costs and list how much money it generates you or helps you generate. And then I like a column that says what percentage of the actual tool am I utilizing in my business? This will allow you to get a good understanding of man. Maybe I am buying something that I don't fully need. For example, if your email marketing tool is this fully fledged tool and you're only really using the newsletter function of it, and no automations and no tagging or automatic tagging or pixeling or their landing pages or all the other things that come with it. You might realize actually only using 25% of this tool, but I'm paying 100% for it. I like to use at least 70% of the tool. If I'm using 70% of the tool, then it's worth it for me and it's worth me sticking around. If you can find a way to get up there and allow it to help you generate more sales for your business, great. If you can, maybe you just bought a tool that is too big for you right now. Now you got to be careful here because you got to be honest with yourself. Why are you not using this tool to its maximum pot? Because the actual tool or the features in this tool are for a business that's bigger than you. Or is it you're just being lazy and you're not actually Implementing the strategies you need. For example, our customers at Webinar Ninja, the ones that really love the product are the ones that run regular webinars because they're getting so much value. They're like, this is a no brainer. I pay whatever it is, 100 bucks a month and I make hundreds of thousands of dollars in sales. So ask yourself, whatever tool you're using, can I use it more? What's holding me back? Can this fit in my business? Guys, I got more on today's Q and A Wednesday. But before that, let me give love to today's sponsor.

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When you do this inventory with a spreadsheet, sometimes people will discover, man, I have a whole bunch of software that I don't even use. I haven't even opened, I haven't even started with. If you haven't even started with a piece of software and it's been a few months, I would say three months, it's time for you to cancel or, or start using it. I'm always on the side of start using it so you can actually make money with this tool. If you're unsure what tools you're using, just look at your credit card statement. What are you paying for? Just go through one month and you'll see exactly what you're paying for. Another tip is any tool that saves you a lot of time is super valuable. For example, we just invested in a software. When I say invested, I mean we are using the software and paying for it that transcribes videos. It's called Spoke. And we use it because we do a lot of customer interviews and we upload those videos and we want to see the language they use in text form and analyze the text and it's really accurate. The machine learning is incredible. And for us, this is an incredible investment to help us understand our customers and build better products. This saves us hours of getting one of our team members to transcribe it themselves or even hiring and paying a part time transcriber. That takes time. That whole, you know, process of hiring somebody and giving them the task and getting the results and then checking their work. When a piece of software can save you so much time. It's a great investment. Craig, I hope that answered your question. I hope that helped everybody who's listening. Tools are exactly that. They're tools. They're ways to help your business. If they're not helping your business, find out how or why. If they're not, cut them out. That wraps up today's episode. If you have a question you want to ask here on Q and A Wednesday, don't forget to email me over@omar00mba.net Would love to answer your question and help you and others who have similar questions in their head right here on the show. Before I go, I want to leave you with this. Every quarter I like to look at all our expenses and reevaluate. Are we still using these products? If not, can we use them in any way? If not, cut them out. This will allow you to stay profitable and stay lean and have a mindful eye on your reoccurring expenses.

Thanks so much for listening and I'll.

Check you in tomorrow's episode. I'll see you then. Take care. Of.

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