Business budget allocation: Most business owners when starting out understand that to have a product requires a lot of brainpower, effort and money. But what few people realize is that launching a product is just the starting point. It’s like entering first grade: having a school bag, a uniform, and a pen. But to grow and succeed, a business must “learn” continuously, must nurture the product like a child through all the classes, through all the challenges. And what determines whether that child will go through 12 years of school, then after 12 will go to university or college, or continue to study for a PhD… Each stage of growth is important and is how the business allocates its budget after the product is launched.
Launching a product is not the end of the journey, it’s just the beginning.
In many strategy consulting sessions, I often hear the familiar phrase: “We have a product, now we just need to sell it.” But the fact is, a product on a desk, in an office, in a box, or on a website is never a sign of success. On the contrary, it is the beginning of the journey. Launching a product does not mean launching to the market. And the market is a fierce battlefield, where every product must compete for a place with data, emotions, experiences, and trust of users.
I often compare the process of creating a product to the process of giving birth. Getting through the “birth” is a miracle. But whether that child will live a healthy life, go to school, grow up, and live a decent life is the big question. A business cannot spend its entire budget on giving birth to a child and then expect it to speak, walk, and take the university entrance exam on its own.
Budget, not money, but a growth map
Many businesses invest 70-80% of their startup budget on the tangible: machinery, factories, packaging, product samples. Things that can be seen and touched. But they do not budget for the “intangible” things: product storytelling, sales team training, market testing, or simply a customer feedback tracking system.
Because there is no budget for the journey of growing the product, many businesses give birth to a child and then… leave it there. No money for proper marketing. No money for running promotional programs. No money for testing new segments. No money for user research. Then when the product does not sell, they go back to product failure, instead of looking at the allocation problem.
A basic formula I recommend for startups is: 40% operations – 30% market – 20% people – 10% contingency. This isn’t a set formula, but it’s a red flag if you’re pouring 90% of your budget into a single source. For example, you’ve spent all your budget on packaging but have no money left over for product packaging. Or you’ve spent all your money on creating an MVP (Minimum Viable Product) but have no money left over for customer feedback surveys. Those little holes will leak the entire effort.
From practice: No matter how beautiful it is, if no one knows about it, it is still a failure
I once consulted for an organic food business in the suburbs. They invested in a closed chain, meeting European standards, the product had almost no flaws. But after 4 months of launching, the consumption was only 20% of the plan. When reviewing, the reason was very simple: no one understood why they were twice as expensive as similar products. There was no campaign to explain the value. There was no tool to measure the customer experience. And most importantly – there was no budget for “talking to the market”.
In contrast, a handmade greeting card company in Hoi An that I worked with – spent only 30% of its budget on production, but 50% on storytelling. They told stories about each craftsman, each stamp, each mailing. They invested in the unboxing experience, in campaigns that evoked memories. The result: products went viral, sold abroad, and had enough left over to invest in a second round.
Budget, a mirror of vision
The mindset of budget allocation is essentially a measure of strategic vision. Businesses with a short-term view focus all their efforts on the visible part. Businesses with a long-term view always allocate budget for things that need to be invested early to reap the fruits later: such as systems, data, and teams. And especially, they understand that there must be a fund to “grow” the product so that the product has a chance to survive in the jungle of choices.
The launch of a product is a milestone, but it’s just the beginning. It’s the first day of first grade in a 12-year journey. Successful businesses are those that are smart enough not to celebrate early, but instead, plan carefully so that the child can go to school, go to class, and pass the university entrance exam.
And if there’s one piece of advice I’d like to give to early-stage business owners, it’s this: don’t spend all your money on the first day. Use it for the long haul.
