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Recent world events have made it very hard to determine how to invest your income. If you’re a business owner, you also have the responsibility of determining how to invest your profits in a way that will protect your business, your income and your employees now and in the future.
If your business relies on other providers for a particular service or product, consider building a backup supply line to make sure that your business will keep rolling. If you currently pay a contractor to provide a particular service, do you have an employee who can fulfill that role? Bringing more processes and products in-house can reduce shocks to your business if your industry hits a bad bump. This may mean paying for training, investing in new machinery or software, or expanding your workspace.
Improve Your Marketing
If your income has gone up, it’s time to expand your footprint. Making more people aware of the value of your products and services will take dollars. If you don’t have a marketing team in place, you may need to start with a social media manager. Another simple way to start is to make a change to your logo, your colors and your sticks and bricks storefront if appropriate.
Invest With a Professional
As your cashflow grows, talk to an investment professional who can help you decide what bucket to put your dollars into. One of the primary steps you need to take is to talk to an investment professional who can help you determine your gut-check. What’s your risk tolerance? How much volatility can you handle before you panic and sell? Bitcoin may be tempting because you can make a lot of money in a short time with the right investment, but you may have two days of big gains, then a drop, then another gain. If you panic on a drop day, bitcoin may not be your best investment tool.
Of course, if you have a board or are a partial owner of your business, any investment decisions you make will need to include all involved parties. Be prepared to accommodate the gut-check and risk tolerance of all of these parties.
Invest for Cash Flow
If real estate is your business, or if you have an “in” with local commercial real estate, you will want to look into a Delaware statutory trust. One of the big benefits of this type of investing is that you can be a “hands-off” real estate investor. Earning cash from a real estate investment doesn’t have to mean that you get the call when the furnace fails.
Is there a part of your business that you hire out but you find it frustrating? If you have a spreadsheet whiz on staff, they may be able to pull data in wonderful ways, but if you don’t understand it you won’t trust it. Take the time to learn. If you’re the type of person who needs to break it, fix it, and learn it, do so. Buy a new software, invest in that program, and crash it until you know it inside and out.
Cash is Nice
Knowing that you have a cash buffer in the bank can do a great deal to lower your stress level. If possible, set up a separate account in an online bank account and create a schedule of deposits. Pay these deposits like a bill and let the account build up until you reach your comfort buffer level. For example, you may be on the budget plan for utilities and have a regular rent payment or equipment lease. Set up your automatic deductions to meet that minimum level of financial comfort and ignore it when it fills up. It doesn’t take a lot of savings to build in a great deal of comfort.
Many small business owners have spent many years putting in a lot of resources in their businesses before they make any profits. If your employees regularly take home more cash than you do, it’s time to boost your income.
If you’re making a profit, you’re ahead of a lot of other businesses in today’s world. Be smart with those profits to keep your business growing. If you’ve been pinching your own pennies to grow the business, boost your take-home.