So, what do startups spend their money on? Thanks to listener William for sharing this one with me; it’s research from Cledara on how money is spent when it comes to Software – notably, often the second largest expense after payroll.
Top ranking spend? Productivity and Collaboration, at 18.8% of the budget. That’s tools like Asana, Slack, Miro, and offerings from Microsoft and Google. Next up is Marketing Automation, followed by Development Tools, Customer Service, and IT Tools. There’s a big “other” pot too, which includes a lot of stuff that varies depending on the industry.
Why do we care?
This data validates for me the approach of focusing on the work layer. That’s where the spending is. Note how IT tools are fifth. IT services companies should understand that ranking because customer importance matters. Go where the money is never fails to be wise advice.
I also like this perspective because it’s young companies – startups. Generally, this is the stage of business where you are most conservative with your spending. Owners are far more deliberate when every dollar counts and you have a finite pile of them. It makes each dollar spent much more critical, so considering their priorities matters.
And note… security isn’t specifically there. I suspect it’s lumped into IT tools, which resonates with something that’s a tax on the business rather than an enabler.