Investing in Your Business: Turning Cash into Cash!

Many business owners don’t like to part with their money and with good reason. The constant barrage of vendors who want a piece of your cash pie can cause you to cling tightly to the purse strings. But have you ever considered that you could be missing opportunities to invest in your business and turn some of that valuable cash into even more cash? It’s called Return on Investment (ROI) and big corporations go to great lengths to evaluate the ROI of large expenditures such as technology purchases and real estate transactions. But for small business owners who are worried about cash flow, ROI can be an important consideration when parting with just a few hundred dollars.nnMarketing and Advertising The cost of advertising is one area where ROI should be considered. Some business owners view advertising as a business expense when it should really be considered an investment in your business. When done right, the dollars spent on spreading the word about your business should come back to you. Though it doesn’t make sense to spend thousands on an ad that will only generate a few hundred dollars in sales, it does make sense to narrow the focus of your efforts and spend what you know you can earn back. For example, if you spent $100 on a classified ad in a publication that reaches your target customer base and your average customer spends $35, you need only three people to respond to the ad to make it pay for the investment. And don’t forget about repeat business. If you have a quality product or service, your customers should return again and again so you can afford to invest even more to attract new customers. Also imagine how much your revenues would grow if you generated ten, twenty or thirty new clients! If you send a direct mail campaign that costs $1000 and your average new client generates $500 in revenues, then you need just two new clients to make it worth your while. Again, consider the possibilities if multiple clients responded!nnBusiness Associations and Networking Trade associations are another overlooked investment opportunity. Let’s say your local Chamber of Commerce charges $250 per year. This may seem steep but you could actually earn that money back. By participating in networking events, you could develop strategic partnerships with other business owners that could pay your membership investment ten times over. Consider the other benefits that come with membership. If the Chamber offers discounts of 20% off office supplies, and you spend $2000 per year on supplies, you could save $400 on supplies alone. Many associations offer member discounts on a variety of products and services such as insurance, copying and printing services, shipping services and industry-specific products. When considering joining an association, be sure to evaluate the benefits and opportunity to save. You could find that your membership dues are actually a bargain.nnEducation Books, information products, and industry training classes provide additional opportunities to invest in your business. If you spend $20 on a book, even if you only learn one new strategy from reading the publication, that strategy could potentially earn thousands in the long run. Have you ever spent hours struggling with a software program that you don’t fully understand? Investing in a three-hour class could potentially save you countless hours of wasted time—hours that could be used to generate revenues!nnOutsourcing Speaking of hours, consider what your time is worth. If you earn $100 per hour for consulting, and you spend five hours per week working on paperwork, you’re essentially spending $500 a week—or $2000 per month—on a task that removes focus from your business. Instead you could hire a Virtual Assistant or part-time employee to handle your paperwork for you. If you hired someone for less than $500 per week, you could free up your time to focus on generating new business.nnBusiness Image Many small businesses cut corners by trying to do everything in-house. As a result, the professional image can be compromised. For example, an unattractive website can actually detract business if it lacks professionalism, if the content has grammatical errors, or if the site isn’t drawing traffic from search engines. A Web designer, copywriter and search engine optimization expert could transform a website from an ineffective online brochure into a money-making machine! A service business that doesn’t have a live person answering the phones is most likely missing opportunities. Consumers are often fueled by instant gratification and if a prospect reaches voice mail, there’s a good chance they will move on and call a competitor. An inexpensive phone answering service could make a world of difference to a business that relies on incoming calls from prospects. Marketing materials are another sorely neglected area. Homemade sales brochures never really look like the real thing. If you want people to take your business seriously, then you need to take it seriously by investing in professional sales copy, design services and printing. So the next time you’re faced with a business expense, instead of viewing it as another obligation, look at the opportunity. Ask yourself the following questions:nn*What is my time worth?nn*Will this investment save me valuable time?nn*Can I generate enough sales to pay for the investment?nn*Are there benefits such as discounts on products and services that will pay for the investment?nn*What hidden benefits are involved? Will I be able to take advantage of networking opportunities, get valuable exposure for my business or generate business leads? Sometimes we have to loosen up the purse strings in order to fill it with even more cash. By evaluating each opportunity to invest in your business, you could reap some tremendous rewards.