Why Invest Back in Your Small Business

Oct 21, 2014, Written by Sue Miley

Reinvesting2Wouldn’t it be nice to take a little extra money home with you after a banner year in your business?  You have worked hard to get here and you are probably ready for it to pay off.

But, think about it.  Once we get to take home a little more, we are at a minimum, really disappointed if we can’t continue to do it.  Soon the little more becomes the norm.  It is your money after all.  You worked hard, you took the risks, and it is only natural to want to enjoy the reward.

I get this part.  I have done this part.

The Gift That Keeps on Giving

I want to make an argument for re-investing it in business growth strategies.
Spend the extra on things that will help you to continue to grow. Here are three great examples of things you can ‘buy’ that will make you money:
1. Employees who generate income.
The right employees, in the right position are more than just an expense. Any of my clients will tell you that I’m constantly talking about how recruiting and hiring is a year round job. I even wrote a hiring guide to help small business owners get the help they need. With the right help, you can actually grow your income exponentially.
2. Marketing that builds sales. 
Can you tell your prospect in one to two sentences a really good reason why you are different or better than your competition? When you do, do their eyes widen with curiosity? Do they nod their head? Do they ask you, ‘Really? You can do that for me? How?’  Sales starts with a compelling, well-differentiated core message. Even the best closer in the world can’t sell if he/she is not supported by a great, unique (and true) brand message and good, solid marketing materials. Investing here, will pay dividends all year long – you’ll get more calls and more sales.
3. Equipment or inventory that can be sold.
Employees are an asset. A strong, recognizable, compelling brand is an asset. Just like physical equipment that has real resale value. Investing in inventory can unleash your growth. You’re not only driven by knowing it is sitting on the shelf, but you’re freed up to pursue those bigger fish by knowing you can instantly deliver on bigger orders than ever. And inventory, like equipment, is lower risk. Worst case scenario, it has resale value.
We know the benefits of bringing home extra money.  We may get to eat better, play harder, look better in the new outfits or a sporty new car.  But, that is consumption and once it is gone, it isn’t coming back. With the investments above, you are spending now, to earn later.

Five More Reasons to Re-Invest

In case you are not convinced, consider these 5 reasons for investing back into your business:
  1. Create a higher return on investment. If we focus investment on growth strategies, those investment dollars will come back to you in future years with a return on the investment.  Higher sales each year will result in higher cash flow and profits.
  2. Reduce taxes. Investing in the business reduces your tax liability in the current year, yet purchases things that will provide ongoing revenue and opportunity in the future.  I don’t believe in buying things you don’t need to save on taxes.  But if it is something you are going to need anyway or it is something that will help you proactively grow, you will come out ahead by not having to pay taxes on the higher profits.  If you take it home, you are only getting approximately .70 on each $1.00.
  3. Reduce growth dependence on YOU! Investing in resources that are income generating will reduce the dependency of the business’ income generation on your own personal production.  You want to have other people producing money for the company so that you don’t have to keep working more and more.  If we take it all home and don’t invest in other growth resources, we have to keep doing more to keep the money flowing to our home.
  4. Provide jobs and help others.  By investing in people’s resources you are helping feed other families, not just your own.  I know it is extra responsibility, but it is helping others which enables you to really gain value and satisfaction from work.  It is a very meaningful purpose for your business.
  5. Improve the stability and longevity of your business.  By investing in foundations for growth, you are strengthening your company and creating long-term stability.  I hear about companies that have a few windfall years, and then when the economy tanks or something happens in their industry, they have to shut their doors.  If they retained the windfall profits in the company, they may have been better positioned to ride out some less stellar years.  We see this principal in the Bible story about Joseph managing Egypt.  He stored up during the feasting years and then when the 7 years of famine came, Egypt was sitting on storehouses to feed their people.

It’s hard. It costs more and more to personally live in today’s economy.  We have to remember that our sacrifice today will lend itself to security for the future.  And, it isn’t an all or nothing proposition. We can slowly increase our take home pay and still invest back into our business.

With the end of the year approaching quickly, what is one or two things that you could invest in this year for growth in the coming year?

To help you consider some growth strategies, you may want to check out last week’s post 5 Strategic Ways To Grow Your Small Business.  If you would like assistance creating a growth plan for your business, call and talk to one of our coaches today (225) 341-4147 or email [email protected].

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Sue Miley

Sue Miley MBA, MA, LPC helps small business owners build successful businesses on a foundation of Christian values. After 20 years in business, and 10 years as a Christian counselor, Sue uses a combination of faith, business and psychology to help clients in business and in life.

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