When you run a business start-up, those first few months to years are all about nurturing it and helping it grow. But with so many different facets needing your attention at once, how do you know what is most important to reinvest? While in its infancy, cash infusions are mandatory – but with so many areas needing money, how do you decide where to most effectively use the money? This is an overview of reinvesting from top accounting firms like Current Accounting.
Traditionally, start-up businesses should use from 30% of the profits up to as much as 50%, but there isn’t really a magic formula. The percentage you choose should fit your overall strategy, not just be a preset number. If you invest too much in one area, others can end up suffering, so there’s a fine line. The thing to keep in mind is that profits, at least for the first six months, should not flow directly into your wallet – they need to be available to help sustain and grow your business.
The most common way that businesses reinvest is through business improvement channels. Things like streamlining manufacturing, refining your online marketing presence, enhancing customer service, or cutting costs to realize greater profits are all ways that you can make business improvements. When you invest, the point is to increase your profits and benefit your company. The more you make, the more you can reinvest.
The only way for your employees to excel is for you to give them the resources and education to do so. Investing in your workforce means ongoing training and experience to make them better members of the team. It also means introducing things like stock options, benefits packages, and bonuses, but that is down the line. Remember, you are only as strong as your weakest worker, so take the time to get everyone up to speed and make sure they fully understand their responsibilities. Hiring a project manager is also an excellent way to help you to meet your goals and expand your business at a healthy rate.
One of the best places to reinvest is through digital marketing to enhance your online presence. There are many places to invest funds, like buying Facebook or YouTube ads or hiring an SEO company to increase your ranking. SEO is a slow burn, meaning that it is a long game, so you might not see the results of your investment right away. But slow and steady does win the race, so try to stay with it. The more energy you throw into it, the more brand recognition you will gain, which will help to expand your company’s market.
Another viable way to grow your business is through buying up others. You will need a healthy amount of cash flow to purchase another company, but if growth and expansion are your overall goals, then buying another successful company is an excellent way to reinvest.
You are the captain of the ship – do you know how to effectively steer it to get where you want to go? It’s okay to admit that you could use some pointers. Invest in your own knowledge to help grow your company by attending seminars and other educational forums to increase your skill set and help you make better business decisions, including where to reinvest and where to cut costs.
As we head into the second half of 2021, things are beginning to return to post-pandemic conditions. Is now a good time to reinvest? You can’t go wrong by reinvesting in your company if you know what your goals and objectives are. Once you figure out where you want to be, you can devise the best route to get there. Top accounting firms like Current Accounting are an excellent resource to get sound advice about when it is time to pull back and when it is time to throw in more money. Contact us today and let’s devise a plan to grow your business to the next level.