Even when small business owners get excited over future sales (woo hoo!), they’re still hesitant to reinvest capital back into their business (nooo!). It’s no secret: the US economy depends on small businesses for future growth. With that in mind, we want to get your investment juices pumping, so here are the 5 best areas for you to reinvest in your small business.
1. People: As a business owner, your time is very valuable. You’ve got more than enough hats and headaches, right? Is your time consumed by the nagging day-to-day stuff, instead of more high-level strategic management? This is where your people come in. Building a strong employee base will free up your time so you can focus on more important tasks, like business planning, business development, or leadership development. Also, hiring new employees will complement any operational gaps that you currently have. Remember that the success of any business is built on a team, not an individual; so start reinvesting in your team.
2. Financial Reporting Systems: that’s a mouthful, right? Well, the whole point of financial reporting systems is to make your life easier. Have you ever wondered how much your top 3 customers are worth to you? Or how much they generated in sales in the last quarter? You’re definitely not alone. Many business owners are still putting their finances on paper, stashing them in those loud, clunky cabinets you had in your high school classroom. They’re probably still riding horses to work too. But it’s clear these businesses often have no idea how much each customer is worth to them, or how much any one product is generating for them. Owners will usually wait until the end of the month, quarter, or YEAR to get any insight into their financial results! That’s going to slow down your planning dramatically.
The good news is that financial reporting tools are cheaper and more accessible than ever. QuickBooks by Intuit is a great place to start looking, but there’s also tons of other vendors that specialize in financial reporting for small businesses like yours. Here’s the takeaway: if you don’t have a reporting system that’s up to date and meets your needs, you are already behind.
3. Working Capital: a lot of business owners fund their working capital (inventory, accounts receivable, payroll) with their current cash flows. That’s usually a good practice when your business is generating enough cash to fund growth opportunities. But what if you’re not generating enough cash? Chances are you’ll get stuck without enough capital to grow. This is dangerous because you’ll gradually lose competitiveness. If you’re stuck, you should look into external funds to dig yourself out of a sinking hole.
4. Interactive Online/Mobile Platform: Did you know that “57% of consumers will not recommend a business with a poorly designed mobile site?” Or that “40% of consumers will go to a competitor’s site after a bad mobile experience?” (source: Compuware). By now, you’re well aware that the majority of Americans own a smartphone or tablet, and are interacting with businesses online. Because of this, you need to reevaluate your total online/mobile reach. It doesn’t have to be complicated. It can be as simple as a mobile friendly website, or as interactive as an online shopping tool.
Fact: a simple table top app can cost you as little as $1,000-$4,000 (source: BlueCloudSolutions). So what are you waiting for? You need to be at the forefront of this. Keep in mind, this is not some trend or fad. The world is now mobile, and you have to join the party or get left behind.
5. Marketing: this is a no brainer. Your business will grow only to the extent that you have an effective marketing strategy. Some marketing strategies are free (build a strong referral base with your customers), but others can be more expensive (online ads, street ads, and printed marketing). Also, marketing has become much more sophisticated and dynamic. One of the most popular strategies is using social media to generate inbound leads. This is called inbound marketing. The times they are a’ changin, what are you doing to keep up?