The Long Game
Running a business is one of the toughest jobs in the world, almost everyday owners are faced with making decisions that could end up making or breaking their business. One of the hardest decisions an entrepreneur is when you start to make a profit, how much should be re-invested into the business and how much to pay themselves. A lot of the time it can come down to the business owner’s individual goals, however some of the most successful entrepreneurs focus on the long-term goal and continually re-invest large parts of the profits back into the business for growth and take a minimal wage.
Every business needs revenue to stay afloat, and to do this they need sales and paying customers. Successful business owners know that the best ways to generate sales is through a detailed marketing strategy that consist of digital marketing. More than ever businesses can invest relatively small amounts of money and reach not just a large audience but also one that has been specifically targeted. Whether it be age, gender, interests, hobbies or location modern technology enables businesses to specifically target their ads to whomever they think is most likely to buy their product. This means that when done well, digital marketing can have a huge return on investment and lead to having a much larger customer base.
Another good way to re-invest back into your business is in adding new revenue streams to your already existing ones. This means adding new products or services to what you already offer. Not only will this increase your overall revenue, it will also help mitigate the risks of your business failing. Adding new revenue streams can increase revenue while simultaneously insulating you from risk if that single stream began to falter. One of the great examples of a company consistently adding new revenue streams is Amazon, which initially started out selling only books on it’s website before adding CD’s and videos in 1998. Since then Amazon has diversified to sell anything and everything online and have now even branched out into film and television streaming and production.
One of the most important areas of re-investing in your business is in your team. Fast growing companies invest in hiring key people, training their staff and hiring contractors or consultants with specialised skills to increase the value of their company by adding the right people to the team. Training your existing team not only means they will be better at their current job, but could also enable them to increase their role in the company and have more responsibility in the future, which is a great way to foster company loyalty. Hiring extra staff or contractors is also a great way to free up some of your time, allowing you as the owner to focus more on expanding the business as a whole. Michael Gerber once wrote, “you need to work on your business, not just in your business,” essentially saying that sometimes entrepreneurs can get too wrapped up in the day to day minutiae of the business rather than stepping back and focusing on expanding the business as a whole.
Elon Musk, Jeff Bezos and Bill Gates are just a few of the entrepreneurs who sacrificed salaries early in their careers so they could re-invest into their business. If you need some advice or help get in touch with us today!