5 Smart Ways To Invest In Your Own Business

5 Smart Ways To Invest In Your Own Business

It’s often said that “You have to spend money to make money.” While there is a great deal of truth to that maxim, spending money does not always bring a return and – if done without forethought and a strategy – it can mean the difference between a growing business and looming bankruptcy.

However, there are other not-so-obvious ways an owner can – and should – invest in their own business.

Five Strategic Business Investments

No matter where you are in the life of your business there are certain items and services that you should invest in if you have not already. In order to grow your business, you do have to put some money into it. Here are five growth investments you should make in your business.

1) A Professional Website

Whether or not you rely on inbound leads to sell your products or services, your company’s website is your “storefront” on the Internet. It is your company’s first impression for a new visitor. In fact, so much hinges on the look and functionality of your website, it should rank high as an investment priority.

When first-time visitors land on your site, numerous studies show that it only takes seconds for them to decide stay and browse, or simply move on. Although you can get by with a low-budget website, working with a professional web developer to create a custom site is well worth the investment. And while it can be costly, you don’t have to spend tens of thousands of dollars to make a good impression.

2) Effective Marketing Efforts

Today the foundation and backbone of an effective marketing strategy is content. High-quality, relevant, and consistent content is the key to attracting, winning and keeping customers and clients. But achieving these objectives with a content marketing strategy takes time and expertise. And it won’t happen with a few blog posts.

One of the best solutions for this challenge is to hire a local marketing agency to manage and execute your Internet marketing strategy for you. Because a marketing plan can be custom fit to your business size and your particular needs, the cost to you for outsourcing can be comfortably affordable.

3) Additional Staff

Far too many business owners remain tied to low-level tasks that require time, but minimal skill sets. The problem is that they and their managers are far less than effective, and their collective productivity suffers. The day-to-day administrative tasks of running the business continue to take their valuable time away from other more important projects.

Being a strategic business owner means knowing when it’s time to hire administrative staff to free your management team to focus on actually building the operation. Any tasks that could reasonably be done by a lower level employee are tasks that high salary managers shouldn’t be doing. In addition to hiring staff, you should also consider outsourcing some work such as bookkeeping, payroll, or call center. Investing to free up more time in your day is always a good choice.

4) Bookkeeping and Accounting Services

Speaking of outsourcing, making use of an off-site bookkeeper and professional accounting service can revolutionize your business. While you may have already taken this step and have a CPA and a trained bookkeeper, are you really fully invested in the potential benefits these professionals can offer?

You should consider hiring a certified public accountant not only for your annual tax needs, but for the ongoing advice and expertise that a CPA focused on small businesses can offer. When your taxes are managed by a qualified professional, you can be assured you’ve filed the right deductions, your taxes are paid on time and you won’t be surprised later with an unexpected tax bill. In addition, having a third-party insight into your financial needs and strategy is well worth the added investment.

5) A Coach or Mentor

Every business owner needs a coach or mentor. A professional coach can provide wisdom, direction, accountability and motivation that is often absent for most business owners. The opportunity to tap into their knowledge, experience and connections is worth the investment. When engaging a business coach, be prepared to commit for a reasonable length of time. Real change and progress cannot happen in a month.

Finding a business mentor is an invaluable asset and investment of your time. If you are fortunate enough to have a friend or colleague to act as a mentor, all the better. And while you won’t necessarily invest money into the relationship, you do need to invest your time in order to get the most “return on investment.” An effective mentoring relationship is a give-and-take arrangement. Be willing to offer your own skills and experience to your mentor, as well.

Business Investments Come In Different Forms

The truth is that investing in your business doesn’t have to cost you huge amounts of capital. But investing in tools and services that provide you with needed information, effectively promotes your product, and helps you and your organization be more productive is money well spent.

Creating Your Business Vision With Your Budget

Creating Your Business Vision With Your Budget

As a leader with a vision for your business you need a budget to plot your financial progress towards it. Budgeting helps you understand whether your vision is feasible or not. And it helps you plan the steps you need to take towards achieving it.

A Budget Supports Your Vision

For most business owners budgeting can be at the top of the list of things they don’t like to do. For them, budgeting properly is a pain. But this is usually the result of many experiences of trying to balance it, or forecast, to the penny.

Yet, while accuracy matters, what’s far more important is getting in the habit of routinely thinking about what’s up ahead operationally that will affect your finances. Getting into the routine of forecasting, then reconciling your forecast to your actual results, will build the connection between your business finance and leadership dynamics.

The Two Types of Budgets

The most common budget is the operating budget. It is typically used to forecast and track a company’s operations and is used alongside the income statement with net profit as the budgeted bottom line. The operating budget should sync well with your income statement, and your accounting system is almost guaranteed to provide you with the financial information needed for tracking and reviewing your budget. The operational budget is what most people are familiar with.

A capital budget is probably less familiar, on the other hand. This type of budget is used to track spending and depreciation relative to large capital expenditures, such as equipment and real estate purchases. It helps businesses determine their return on investment for these purchases.

Because these types of non-operating expenses typically don’t show up on your P&L, you can use a capital budget to plan for the cash required for the expenses that only show up on your balance sheet.

Businesses that forecast losses can also use capital budgets to track negative cash flow requirements. And start-ups often use capital budgets since they typically make a number of major investments during the first few years of operation.

While your own company will need an operational budget, your CFO, controller or even an outsourced accountant can help you decide if you also need a capital budget.

Four Steps for an Effective Budget Process

Budgeting isn’t something you just do once a year – or, at least, it shouldn’t be. You should schedule planning and monitoring cycles on a regular basis. These four steps explain the process you can follow and suggests which position in your company should be responsible for each task:

  1. Set up the budget process. At the very beginning, you’ll have to decide on a budget schedule, categories, document formats, and who will be responsible for what. This is a management task that usually falls to the CFO, your controller – or both.
  2. Plan and forecast. The leadership team, which is the CEO, or owner, the CFO, and any key managers, should handle this step. In every budget cycle, you’ll begin by planning and forecasting to build and guide your business in the following months. Construct your business plans using the budget numbers against which you will track your progress. You should conduct formal planning, forecasting, and budgeting sessions regularly — preferably quarterly or at least annually. Keep in mind that your budget forecast will not reflect the realities of your business unless you continuously fine-tune and adjust it as part of your ongoing monthly reviews.
  3. Monitor and report. The controller will use your accounting system to gather and organize your actual results, and create monthly budget variance reports that indicate where actual results differ from your plan and by how much they differ.
  4. Review and manage. The leadership team studies the controller’s budget and variance reports for insights on how to improve the business, spot problems before they become serious, and maintain a strategic picture of your business. In addition, you should review and confirm your budget forecast assumptions and revise them as necessary. Review your budget and variance reports with your key employees, make management decisions based on those reviews, and then execute those decisions.

Budgeting With Your Future In Sight

Improving your business budgeting process to incorporate your vision is a smart strategic move. Money is not only the fuel for your business today; it is the building material of your company for the future. As your business grows, approaches that sufficed in the beginning may not be sufficient going forward.

Your budgeting and financial planning processes must grow with the needs of your business today, and for the vision you have for the future.

How To Lower Your Business Expenses

How To Lower Your Business Expenses

The start of a new year is one of the best times for a business owner to examine their budgets and find ways to both try and increase revenue and lower business expenses. Oftentimes, cutting a little bit in a few areas can have just as much impact as cutting a lot from one or two budget items.

With these considerations in mind, we’ve put together a list of nine ways to trim business expenses from your 2016 budget and make your year more profitable:

1) Reduce Energy Consumption

Reducing energy consumption can add up to big savings over time. Make sure computers and other office equipment are set to go into low-power modes after working hours are over. Install energy-efficient lightbulbs, and (if possible) utilize hybrid engine vehicles if your business requires lots of driving or deliveries.

2) Work From Home

Working from home is becoming increasingly popular not just for its convenience, but also for its correlating reduction in businesses expenses. Money saved by not having to pay for office space and all the associated costs that come with it can be saved or reinvested in other areas.

3) Take Advantage Of Early Payment Discounts

If your business relies on suppliers, make a note to see if any of them offer a discount for paying invoices within a specified period of time. For example, some suppliers will offer discounts up to 2% if invoices are paid within 10 days.

4) Reduce Travel Expenses

Company getaways, conferences, and trade shows can be a lot of fun and beneficial to building your business — but they’re also expensive. This is a good time to re-examine your travel schedule (and budget) to see if there’s anything that can be skipped this year.

5) Look For Cheaper Office Space

Another benefit of the rising adoption of working from home is that in many areas it has created an abundant supply of office space with diminishing demand. For business that do need office space, this is an excellent time to shop around and see if a better deal can be had.

6) Buy Used Instead Of New

Desks, chairs, copiers, and many other core items that make up common business expenses can be purchased used rather than new. Find a few reputable office furniture dealers in your area and inquire about used inventory.

7) Pay In Trade

If you business is strapped for cash, or you’re just looking to shave costs any way you can, see if the products and/or services you want can be paid for in trade — by offering to exchange your product or service for theirs. It’s important that both parties feel the exchange is fair, but otherwise it’s a great way to save money.

8) Don’t Overstock Supplies

It’s easy to walk into big-box office supply stores and come out with a year’s worth of office supplies. It may seem like a bargain at the time, but you can reduce costs by keeping a closer watch on what you’re actually using and making sure only those items are replaced.

9) Cut Taxes

It pays to be diligent about documenting legitimate business expenses so that when tax season comes around, you can ensure that you’re getting credit for all the deductions you can. Work with a competent CPA and let them help you if you’re not comfortable doing it all on your own.

Working Smarter, Not Harder

Reducing business expenses often means taking a step back and carefully examining your existing processes and seeing if there’s room for improvement. As your business grows, things that worked in the beginning may not make sense anymore and end up costing more money.

Stay vigilant and keep an open mind about alternative solutions and you’ll find ways to save money you never expected.

3 Common Uses For Working Capital

3 Common Uses For Working Capital

At Premier Business Lending, we see and believe in the benefits of working capital loans for your business. Working capital is a short-term loan that is very flexible and offers a variety of financing options to help you achieve your goals.

There are many types of businesses that regularly utilize this kind of loan, and we’ve put together a list of three of the most common purposes businesses choose to borrow working capital.

1) Unforseen Circumstances

Sometimes things break, and usually it’s at the worst possible time. It doesn’t matter if it’s a vehicle, network server, or table saw — a working capital loan can help your business quickly recover from the loss and replace your broken equipment.

2) Inventory

Inventory is expensive, and often the only way to mitigate a portion of that cost is to buy in large quantities in order to receive volume discounts. What that means for you is a large upfront cost that may tie up a significant portion of your existing capital.

With a working capital loan, you won’t have to choose between buying inventory or paying bills, you’ll be able to comfortably do both. This will help your business to grow and won’t put unnecessary strain on your company’s finances.

3) Business Expenses

Do you want to attend a trade show to help promote your business? Maybe even have a booth at the event? Do you want to hire new employees or relocate to a new office? All of those expenses and many more can be prohibitive to a new or small business.

Once again, a working capital loan is a great way to finance large expenditures that you wouldn’t be able to afford otherwise. By enabling your business to buy the products and services it needs to grow to the next level, you can help secure your business’s future.

Do You Need Working Capital?

If your businesses is faced with one of the challenges mentioned above, consider talking to an experienced loan professional who can help you evaluate your needs and determine if a working capital loan is the best course of action for you.