Splurge or Save: A Scrappy Founder’s Guide to Knowing When to Spend

When you’re building a company, every dollar feels personal.

Especially when you’ve lived through the highs and lows of entrepreneurship: periods of profitability, periods where you have to tighten everything, and moments where it feels like one decision can determine whether you continue on as a company or have to pull the plug (we’ve had many of these at Shoott and each time we are faced with this decision, it’s equally terrifying!).

Over the years, one of the biggest lessons I’ve learned is that learning how to be “scrappy” is one of the most crucial skills to develop as a founder.

Being scrappy doesn’t just mean avoiding spending. In fact, refusing to invest can be just as dangerous as overspending. The companies that survive are not the ones that spend the least. They’re the ones that know where every dollar can create the most leverage.

Here are six principles we’ve used to decide when to save, when to splurge, and when to walk away.

1. Don’t spend money on things you can’t measure

The more expensive an investment is, the more evidence you should require.

This is especially true with areas like marketing agencies, consultants, expensive software, or high-ticket outside “experts.” A great partner/vendor should be able to explain exactly what they’re going to do, why it should work, and how success will be measured.

Before investing, we ask ourselves:

• What specific outcome are we trying to achieve?
• What metrics will determine whether this is working?

And we ask the vendor/partner:

• Have you done this successfully for companies like ours?
• Can you share examples or case studies with measurable results?
• How will we evaluate progress in 30, 60, or 90 days?

A founder mistake is being impressed by someone’s credentials, personality, or presentation and assuming that translates into results.

The best vendor/partners can prove their ability to create outcomes and provide specifics without getting defensive (pro-tip: defensiveness is the reddest flag out there!).

2. Invest in Leverage, Not Busywork

One of the biggest traps for cash-strapped founders is believing the cheapest option is always the best option.

Early on, founders do everything themselves because we have to. We become the marketer, recruiter, salesperson, operations team, hr (not advisable!), and sometimes even the person fixing the website at midnight.

But eventually, the question needs to change from: “Can I do this myself?”

To: “Is this the highest-value use of my time?”

If spending 20 hours learning a new tool saves you $500, but those same 20 hours could be spent closing a partnership or improving your product at scale, the cheaper option may actually be more expensive.

Your time as a founder is one of your company’s most valuable assets. Use it wisely.

3. Get creative with negotiating!

Founders often focus on getting the lowest price, but there are other options that might be equivalent or even better.

Especially when you’re growing, uncertainty is unavoidable. You don’t always know which investments will work, so you need ways to test, learn, and adjust.

Look for opportunities to negotiate elements like:

• shorter commitments
• pilot programs
• milestone-based payments
• performance incentives
• flexible cancellation terms
• smaller tests before larger investments

Try to secure “deals” that let you learn without taking unnecessary risk.

4. Spend aggressively on things that compound

There are investments that continue creating value long after the initial check is written. We’ve found that these are some major areas where founders should be willing to invest:

• great people
• customer experience
• technology infrastructure
• systems and automation
• brand reputation
• data and insights
• your own health and ability to lead

A useful question is:

“Will this investment still create value six months from now? Five years from now?”

The best spending creates leverage. It allows your company to do more, move faster, or build something stronger than you could have built alone.

5. Pay for peace of mind when the alternative has a hidden cost

Some decisions are worth spending money on simply because they remove mental load.

Founders carry an enormous amount of responsibility, and making sure your mental state is in the best state is crucial. We’ve found that sometimes, it really pays off to invest in things like:

• a great accountant (vs constantly worrying about your books or having to check someone’s work)
• a great lawyer (instead of hoping you interpreted something correctly or simply relying on AI legal advice)
• better tools instead of working manually or patching together inefficient systems
• outside help instead of staying buried in tasks that distract you from your highest priorities

We often think of “cost” in financial terms, but often, costs can show up as distraction, stress, slower decisions, and missed opportunities. Peace of mind should never be underestimated.

6. Don’t let being scrappy turn into false savings

One of the hardest lessons founders learn is that some of the most expensive decisions initially look like savings. Examples include:

• Keeping a bad hire because replacing them feels expensive.
• Avoiding marketing channels because the return isn’t guaranteed.
• Using outdated systems because changing them feels painful.
• Doing everything yourself because delegation feels risky.

We’ve learned the hard way that our goal should not just be to spend less. Rather, we need to be spending with intention; and in order to do that, we need to know the difference between an expense and an investment.

Because ultimately, being scrappy isn’t about spending nothing - it’s about making every dollar count.