Many business owners struggle with two contradictory pieces of financial information. The first is that “you have to spend money to make money” and the second is often the reality of your business bank account. When it comes right down to it, the amount of money you have determines how much you can spend.
That’s why we are providing five pointers for you to consider as you make those big financial business decisions:
1. Projects must pay for themselves.
When you are considering implementing a great new project or launching a new line of products, take a look at when these products or services will begin to pay for themselves. It should be sooner rather than later. If the product or service will make your business go into debt or become nonviable, reconsider your strategy. You may be able to launch your product or execute the project in a way that will get it paying its own expenses rapidly.
2. Invest in things and people who will make you money
This is really where the saying “you have to spend money to make money comes from.” As you build your business, you will have to spend money on physical things like an office, chairs and desks, computers, and more. Additionally, you will be spending money on employees as you need to pay them.
However, really investing in people and things that will make you money in the long run is a deeper consideration. For example, you may want to invest in your sales force by paying for them to go to seminars or providing them with webinar software. You may want to invest in your best employees by giving them bonuses and rewards. Showing your team that you care and affording them with ways to do their jobs more efficiently can go far in building a loyal staff.
3. Set aside money for marketing and PR campaigns
Every business needs marketing and PR to thrive. That’s why your business should be consistently forwarding campaigns and setting aside money for future campaigns.
Marketing and PR are often concentrated upon by businesses when they are in the red, and ignored when the business is in the black. This should not be the case for your business. When you are in the black, keep investing in marketing and PR. Continuing successful campaigns is a great way to stay above water as a business.
4. Budget for the unexpected
Even the best businesses have unexpected issues come up. Some are exciting – you may have launched a product only to have it sold out immediately, meaning you need to rush in new inventory at higher than normal shipping costs. Others, like an unexpected increase in taxes, are less fun to fund. However, if you have monies set aside that you can lean on in cases of the unexpected, your business does not have to go into the red just to stay afloat.
5. Only buy products and services that will help your business expand faster
Some large purchases can feel hair-raising to a business owner. Opening a new office or offering additional employee incentives can feel like overwhelming commitments. However, if spending money on these actions will help your business grow more rapidly and thereby grow your income, they are the right decisions to make.
Creating a financially sound business can be a balancing act for many business owners. Contact us today to find out how we can take the stress out of your business finances.