As a startup, it is important to understand the concept of investing. To invest is to allocate money in the expectation of some benefit in the future. In finance, the benefit of an investment is called a return. Why is it important for you to invest in the elements of your business? Simple to get any form of return you have to invest.
Here are some of the best ways to invest and reinvest your company’s first profits.
Two Types of Investments You Can Make in a Small Business
- Business improvement
A lot of startups spend their initial profits in reinvesting, and your company should be no exception. The key element to reinvesting is to have a solid strategy, not to necessarily devote a certain percentage of your profits. Your reinvestment efforts should be in line with your current strategic business plan.
Most business owners choose to reinvest their profits in business improvements. Examples are infrastructure, equipment, streamlining business processes, or finding ways to improve the customer experience. These are all valuable strategies because they can increase your profits in the long run, allowing you to expand business operations.
Digital marketing is a smart investment of profit when it’s done well. Many of the startups wait several months before they do any real investment into marketing. This is because they just don’t know where to start. You can’t lose by investing in performance metrics. Always keep track of your campaigns and adjust them accordingly. If you have little experience with marketing, consider outsourcing to an agency.
- Invest in your team.
Building a better workforce will streamline your business, improve productivity, and create the kind of company culture that will attract hard workers. Reinvest profits in human resources initiatives such as training and continuing education. As your business grows, you can expand to include benefits packages and other discounts. Investing in your employees early on will help you reduce turnover. Keep in mind, hiring a new employee costs a lot of money – about six to nine months of a lost employee’s salary, on average. So insourcing a virtual team can help minimize costs.
- Invest in yourself.
Find ways that you can improve yourself in subject matter expertise. Many startups are spearheaded by people with a good eye for innovation, but who don’t necessarily know how to manage people. This is actually one of the most common criticisms founders face. Classes on management or basic business operations can be invaluable for people who don’t come from a formal business background.
- Hire help
To that end, entrepreneurs are also guilty of trying to wear all of the company hats. Recognize when you need help, and ask for it. New hires can provide the technical skills and know-how to keep your operations running smoothly. This is one of the best investments you can make in the long run.
- Consider coaching
If you’re unsure of how you should create your strategic plan, consider using some of your profits to hire a career coach. These professionals can provide guidance on executive leadership, creating a business strategy, talking to investors, and handling conflict between employees, among other things.
- Outsource your least favorite tasks.
We all have a dreaded task that sucks some of the joy out of running a business. For some, it’s balancing the books or running payroll. For others, it’s assessing and tracking the efficacy of marketing campaigns or content creation for the company blog. Fortunately, you can outsource most of these to third parties. Find someone qualified and hand over the task.
- Improve your SEO.
Spend some time, money, and energy getting that website to the top of Google’s Search Engine Result Pages (SERPs). For the uninitiated, Search Engine Optimization can be tricky, but you’ll get the hang of it. The small business administration offers a useful primer on the topic, as well as other resources. If you’re looking for a way to see a significant return on investment in a relatively short time, this is one way to do it.