How to Take Charge of Your Business Finances & Make Smart Investments That Grow Your Business

How to Take Charge of Your Business Finances & Make  Smart Investments That Grow Your Business

In the beginning, it's hard to know what you don't know about running your business, especially when it comes to investing time and money. Here's a rundown of what you should consider from two different perspectives in business: 1) from the perspective of $0 in revenue and 2) from the perspective of consistent and predictable revenue coming in.

Let's get started!

how-to-manage-business-finances-investments

The following illustrated the first four years in my business:

My first year in business: "What am I doing!?"
The second year: “Yeah I think I can do this.” 
The third year: “Yeah I got this!”
The fourth year: Investing back into the business 

Here are a couple of different perspectives when it comes to investing back into your business.

1. How to determine which investments to make when you don't have any revenue coming into your business
2. How to determine which investments to make once you have revenue coming in 

What is ROI?

We can’t talk about investments without talking about ROI, which stands for "Return On Investment."

ROI is a performance measure used to evaluate the efficiency of an investment or to compare a couple of different investments that you could make in your business. It's a way to understand whether the expense you're making will produce an outcome greater than the investment.

Example: If I pay $150 for an hour of consulting how am I going to use that investment to make more money than $150? OR If I hire an employee at $50,000 per year what is the expected outcome of revenue that that employee is going to make for my business?

Sometimes it's obvious, you know you pay a certain amount of money and you get a defined definitive amount of money back but sometimes you don't know. 

Only take on "good debt" to free up cash flow for revenue-producing investments 

When you don't have debt weighing you down, you are able to leverage the cash flow in your business to make investments that are going to pay off in the long termYou're not taking that cash flow and paying off a credit card bill or a car payment.

Sometimes it’s necessary to have credit card debt and a car payment, there are certain situations where you have to take on that debt in order to survive, so I'm not bashing people who are in debt. I’m letting you know that there is so much freedom and flexibility to be able to deploy your cash in revenue-generating opportunities that are going to make you more money.

So, if it comes down to money management and spending habits, like having Starbucks everyday and going in debt or making coffee at home and using that extra cash to be able to invest back in your business you need to make smart decisions up front. 

 

Initial startup costs

I bootstrapped my business which means that I did not take out a loan in order to get my business up and running. I used the income from a job that I was working and savings that I had built up.

Here is what I know from evaluating and going through not knowing what I should and shouldn’t invest money on. There are expenses that people assume they need to make when they start a business, but may not necessarily need to make...

Loans

A lot of people assume that they're going to have to take out a loan to start a business and that may not be the case. The profit you make has to go back to paying your loan, so when it comes down to it you may be generating revenue but until you're able to pay off people that you owe money to you're not going to be able to consider yourself profitable until you're in the clear.

Office space

Do you need an office space? Could you work from your couch or a coffee shop? Once you're getting started as an online businesses or e-commerce businesses you may not need an office. 

Email Marketing Subscription

Email marketing subscriptions like Mailchimp and a lot of other platforms offer a free version. The reason why they do that is because you as a non revenue-generating business are not their target market.

You as a revenue-generating business are in their target market. They want you to make money so they offer you a stepping stone to be able to leverage their platform in your processes until you're able to generate revenue. 

Project Management Tools

The project management software that I invested in early, I ended up not needing it after two months. Make sure you really consider which monthly subscriptions you need because the cost can really add up.

Consider using Google Docs or some more manual processes until you get up and running and understand how that investment is going to fit into your business. 

How to determine which investments to make with no revenue coming in  

Questions to ask yourself:

  • Do you need this investment in order to open your doors? 
  • Do you need a storefront?
  • Do you need paid subscriptions?
  • Is the cost a requirement to generate revenue?

If it's not, then you need to think twice about it. 

Platforms in your business 

When beginning to use paid platforms/subscriptions, use the month-to-month payment option versus the annual payment option first. A lot of platforms will offer a discount if you pay for the year and it sounds smart and seems like you’re saving money, but a lot of times because of the changes in the first year you may not even need that platform.

Consider that extra little bit that you pay month-to-month option as an insurance that you could back out and not be tied into the bigger chunk of the annual investment.  


Evaluate your credit card on a month-to-month basis 

Look at your credit card, don’t just pay it and send it off in the mail. Look line by line at what you're actually paying for and if you don't need it any more get rid of it.

I always recommend in the first year, try to go without. 

There are a lot of things that you can do once you start generating revenue but sometimes you just have to go with the free version or without in order to get the business up and running. 

The first year in business is eye opening. Often how you think the first year will play out is very different from how it actually plays out. It may even be the case that you  pivot your strategy to go after a different target market or offer a different product or service. Step into that space of unknown and start learning and building that your decision making ability.

Things I would invest in with no revenue coming in 

1. Website

Buy your own domain and connect it to your website. 


2. Computer

You're probably going to need a computer to get up and running, if you don't already have one. This is definitely a necessity of every start up.


3.Business cards

They don't need to be fancy, but they should be professional and reflect your brand.


4. Professional or brand appropriate attire

You have to look the part. You don't have to wear a suit if the suit is not indicative of your business but you do need to look professionally "you." 

 

How to determine which investments to make once you have revenue coming in 

Here are some general questions that you should ask yourself: 

  • Do you need it and can you afford it? 
  • What is the return on investment? 
  • How long will it take you to start making money from that investment? 
  • How is it contributing to the bigger picture of your goals and strategies?

 mastermind for entrepreneurs

Monetary investments I've made in my marketing and consulting business

1. Two different large-scale conferences 

These have been invaluable to my business. I vetted them very carefully and had certain goals and expectations that I wanted to get out of them. I spent close to $5,000 to attend these two conferences and it was well worth the money. 

  • The Kajabi Impact Summit: It was a phenomenal conference. I saw Neil Patel Patel, Amy Porterfield, Chalene Johnson, Rachel Hollis, and several other rockstars. I was able to use it in my content, marketing materials, and not only the marketing side but also the relationship side of it where I built relationships with people across the world. I also brought 32 pages of notes home with key business takeaways, that I refer to on a regular basis! It has helped shape my approach to business and marketing. That's value that I can then pass along to my clients
  • Blissdom in Nashville: This conference was very much a relationship builder, but I took a lot of great information away from this one as well. 

2. Pinterest expert for for $2,500  

I added a Pinterest marketing specialist to my team. The investment paid off incredibly. She was amazing and her Pinterest strategy was effective. I would definitely recommend this marketing platform if it works for your revenue model or your business model. 

3. Branded material 

I’ve ordered branded water bottles - something tangible to be able to hand out to new connections - business cards, branding photography for my website. Branding is so powerful and it's definitely an investment I recommend making.

4. Professional photos

Having branded professional photos really goes a long way for positioning yourself as an expert in your field. 

5. Business consulting and auditing 

I paid a consultant to audit and to talk with me about strategy in my business. He is a marketing expert with 20 years in the corporate world of marketing. I value his insight and paid $150 for an hour of his time to say - "This is where I'm going with my business, these are the actual concepts that I used to develop a strategy for clients, what do you think what am I missing and what knowledge gaps are there?" It is so valuable to sit down with somebody who can give you that feedback. It's important that we audit ourselves, it’s important that we look from an objective perspective about what we're doing and allow experts to lead us in the right direction.

6. Virtual Assistant’s

I have contracts out right now with 2-3 Virtual Assistant's. I am bringing help underneath my umbrella to be able to reach a larger audience and make a bigger impact. I’m capped - my hands are tied so I cannot take on any more client unless I have help.

7. Service platforms 

Email marketing, schedulers, project management software, stock photos, etc. Those are ongoing expenses for a month-to-month basis that help me deploy and send out a consistent message on a regular basis. 

 

Time investments I've made in my business

As far as time goes here's what I've invested my time in this year... 

1. Running an organization in Peoria, IL called Lipstick & Lattes 

We meet once a month to help push one another through current challenges. This has been a great investment of my time to be in community with other business owners. 


2. Trading services with another expert instead of actually paying each other 

Trading services is a fantastic way to support other experts in your circle of influence.


3. Joining the board of directors for the brand of Peoria Innovation Alliance 

I give my time to this organization on a monthly basis. It’s a fantastic organization that’s doing substantially positive things for the community, but it also allows me to shake hands, have conversation, and build relationships with people in the community. 

4. Speaking engagements 

I've spoken to local universities and organizations just giving my time and being the thought leader on the topic discussed. 


My hope is that this post has walked you through the process of good decision-making of evaluating investments in your business and gain insight on the importance of ROI in your business!  

Check back often for more business decision-making insight!

______________________

ABOUT THE AUTHOR, FRANCIE HINRICHSEN

SEO-expert-marketing-company

Hi there and WELCOME! I'm Francie. There's something you should know... When my feet hit the floor every morning, my soul is on fire to help people start, grow, and market the profitable and successful business they dream about.

I started this business, Simply Integrated, in 2015 and have fallen madly in love with teaching small business owners how to run their companies more successfully and marketing to impact bottom line profitability.

My knowledge and experience comes from earning an MBA and from coaching small business entrepreneurs while managing and marketing their projects. I focus solely on business strategy and marketing and created this blog to help others run more successful businesses. If you’re interested, you can read more about me on the About page of Simply Integrated’s website.

 

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