You’ve received your business funding – congratulations! Now for the fun part – growing your business. So how can you make sure that you spend your money wisely? Understanding how to spend working capital in your business is a real skill. So here are the 5 best ways to invest your funding in your business. Do these, and you will be well on your way to really building your small business.
Avoid nice-to-haves
It can be so tempting to spend the cash on everything you’ve always imagined for your business. But as hard as this is, you have to resist the urge to splurge on unnecessary items.
In order to assess what is pressing for the investment, take time to review your original business plan. Look carefully at your cash flow forecast as a guide on what you need to be spending on right now. The areas to avoid are expensive printing costs, overpriced office space, and equipment as well as pricy business trips and lunches. Essentially this boils down to understanding what is truly essential in order to run an effective business.
Spend on must-haves
There are certain investments that a business needs to make very early on; such as hiring core staff members, an accountant, and legal support, developing customer service, and investing in branding. While you don’t necessarily have to pay top dollar for these, it is always important that you invest in high-quality personal and services. When you invest wisely here, you will be growing your business from the inside out as each of these will create a robust infrastructure on which to build future business.
Evaluate your technology requirements
Software, upgrades, hardware, and tech are highly desirable but you should always only purchase the technology that serves your current needs. This kind of financial responsibility allows for sustainable incremental growth. When selecting technology it is important to cover practical operational requirements, install top malware and security, followed by investing in tech that will empower future marketing campaigns.
Invest in bulk discounts
A great way to use your cash advance for example is to negotiate with your suppliers to get a good discount in exchange for a large bulk order. The smart thing about this is that it then enables you to make a higher return on future sales, thereby strengthening your bottom line. Further to this, you will also be investing in your relationship with your supplier which may bode well for future deals and terms.
Identify other growth-enhancing activities
When you look at the various cost centres in your business you will quickly notice that certain costs drain a business, while others build it. This is why it is never a good idea to use funding to plug holes. Rather, funding should be used on growth-enhancing activities that create opportunities, stimulate appetite for your product or strengthen weak spots. Marketing is a good example of this: An effective marketing campaign can grow your market share and move existing stock. Sales training is another great place to spend funding: By investing in your team you can then use that once-off cost to develop skills and motivate your personnel to push ahead and make new sales.
The bottom line
Just because you received your funding, doesn’t mean the hard part is over. On the contrary, understanding where and how to invest in your business is crucial. This often boils down to using your business funding for growth-enhancing activities. Because when done right, funding should build your business in a steady and sustainable way. To understand how funding can grow your small business, contact us today.
