Dollars are important. You work hard for them. When you have them, you can build a business, hire new people, and expand your offerings.
When you don’t, life is stressful.
It’s only natural that parting with the money you’ve worked so hard to earn gives you pause—even if the prospect of “reinvestment” sounds like the next logical step for your company.
But if you’re still skittish about sinking money back into your business, you have to remove the fear of wasting money.
Don’t let the risk of sunk costs steer your company off the path to growth. Instead, consider these strategies for reinvesting in your company without wasting money:
Tip #1: Reinvest in Areas You Know Need Improvement
One of the most powerful advocates of business reinvestment was the steel magnate Andrew Carnegie. Carnegie wasn’t a man who thought he should invest in a lot of side businesses—in fact, he once said that the key to succeeding in business was to put one’s eggs all in one basket—but he did believe in making his own businesses better. Carnegie would repeatedly sink surplus capital back into new technology in his steel mills to make them more efficient and better than the competition.
You don’t have to own your own steel mills to glean a lesson here: there are probably some areas in your own business where you know you can do better. Here are some focus areas to consider:
Customer service. According to a study in the Harvard Business Review, customers who had the best experiences with a company spent 140% compared to those with poor previous experiences. Customer service is a reinvestment that pays off in reputation and the perception of quality—which in turn helps fuel further growth.
Quality of your product or service. It’s not just about your reputation—it’s also about your quality. When a customer has your product in hand, what’s their experience? Will they feel more inclined to buy from you in the future?
Productivity. The basic balance sheet of a business says that you spend X and receive Y. Productivity helps you minimize X while maximizing Y. The more productive and happy your employees are, the better off your bottom line will be. Think about reinvesting in productivity boosters such as software suites and investing in automating those processes that can be automated.
Tip #2: Reinvest in Your People
A company is only as good as the people who run it. That doesn’t just mean you. It means everyone—from the founder/CEO to the most recent hire.
This reinvestment isn’t only about working with the right people. It’s also about building a culture that attracts the right people. A 2017 study found that over 90% of top-performing employees viewed employment training programs and development opportunities as an important priority in deciding where to work.
If you aren’t reinvesting in your people, you might not always attract the right ones.
Want additional tips for creating and investing in an employee development program? Check out the resources available at Business.org.
Tip #3: Reinvest with Marketing that Has Demonstrable ROI
Sometimes you’ve already got the infrastructure in place. You’ve got good service. You’re ready to scale. You’re ready for more customers.
You just don’t have the customers.
If that’s the case, then reinvesting in your business with an increased marketing budget may be the way to go. Here are some marketing statistics and trends that should offer you the return on investment (ROI) you’re looking for:
Email marketing. Statistics suggest that email marketing offers some of the best ROI, with three quarters of company agreeing that it offers “good” to “excellent” return on investment. If you knew in advance that most companies would agree that email marketing was a good way to spend your marketing money, would you do it? Well, now you know.
Analytics. It’s not always easy to slap a bottom-line statistic on the value of analytics, but consider this: without effective analytics, you can’t run the tests that help improve your efficiency. Think of analytics as the bedrock of the knowledge you hold: with it, you’re able to demonstrate where you’re going wrong and where you’re going right. When you consider that only 21% of companies report confidence in their analytics, you’ll recognize what an advantage this can be.
Video marketing. A 2013 survey showed that more than half of respondents believed video marketing to have the best ROI in all of marketing. Video has only grown in relevance since then.
Tip #4: Invest in Yourself
If you’re running the business, then your business will often grow at the rate you grow. That can be good news or it can be very bad news.
But there’s upside here: reinvesting in yourself will pay dividends in a wide variety of ways, from improving the way you run the business to the way you approach your personal life. It pays to invest in yourself—and oftentimes, it’s not nearly as costly as you might think.
- Take more time to read. Think of reading nonfiction as downloading new information like Neo in “The Matrix.” Reading gives you access to a wealth of experience and cuts down the learning curve in any area of life you can imagine.
- Take more time to manage your stress levels. You aren’t at your best when you’re stressed. Consider planned vacation days and de-stressing activities to be more than an investment in your business; they’re also an investment in your personal health. The better you function, the better you’ll interact with your company.
- Take more time to invest in your leadership skills. You might have had a great idea to build a company, but your entrepreneurial spirit doesn’t always translate to leadership skills. Consider an example from the NFL: in the off-season, quarterback Mitch Trubisky knew the Chicago Bears had invested a lot in of resources in the hope that he would lead their franchise to a winning tradition. Trubisky decided to read “The Captain’s Class” in the off-season to learn from the experience of historic sports dynasties throughout history; as it stands, the Bears (and Trubisky) are much improved on the year.
Spending money doesn’t always mean you’re wasting it. If you put it back into your business—and buy something other than more office supplies—there are plenty of ways you can maximize your productivity and build a stronger company.