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How to Reinvest in Your Business for Growth

  • October 14, 2021
  • 3.5K views
  • 5 minute read
  • Rene
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Most entrepreneurs are familiar with the advice, “reinvest in your business.” It goes hand-in-hand with other adages like, “you have to spend money to make money.”

But what does it mean to reinvest in your business?

The idea is that some of the profits you reap from your time and effort should be directed back into the business to increase the cash flow and assets. As a business owner, it’s important to pay yourself— but it’s also important to set yourself up for future success.

Here are some practical ways to reinvest in your business to promote sustainability and growth.

Dedicate Funds to Marketing

Your business will never grow and thrive if you don’t invest in attracting new customers while retaining existing customers.

Marketing is the foundation of expansion and growth, and unfortunately, it comes at a cost.

While there are several things you can do to market your business without spending money, some of the most successful and long-term strategic approaches require an investment.

As a small business or startup, set a goal of investing 5-10% of your profits back into marketing activities.

Using the percentage approach provides bandwidth for your marketing funds to grow as your business grows.

Eventually, you might reach a threshold where you max out what you’re willing to spend on marketing.

By this point, you’ll be established enough that you can reallocate funds into other areas of the business.

Keep in mind that you may have to start by investing beyond your profits to get a foothold with a new business.

Create an Emergency Savings Fund

Many entrepreneurs and small business owners found themselves at a loss in March 2020, when the global pandemic forced everyone home.

Depending on the nature of the business, this pivot could be a blessing or a curse.

Regardless, it was an eye-opening experience for many business owners who lacked a savings fund to cover their expenses when the money stopped coming in.

One of the smartest things you can do as an entrepreneur and as a person is to create an emergency savings fund. Start with a small goal of saving up to $1,000.

Then, expand that savings account to cover at least a month of business expenses should an emergency occur.

Ideally, you’ll accumulate three months’ worth of business expenses in an untouched account.

Hopefully, you’ll never need this account. If you do, your next goal will be to replace whatever you’ve used to get through challenging times.

Invest in Professional Development

One of the primary benefits of owning a business is the ability to invest in professional development as a business expense. After all, you are the lifeblood of your business.

Consider setting a goal of investing in at least one continuing education or certification program per year— more if the options have merit.

Use this fund to take a negotiations course from Harvard or to work toward your Lean Six Sigma Green Belt to attract a higher caliber of clients.

Do not use this fund to purchase courses and leave them collecting dust on your desk or desktop.

Create structured action plans to complete your work before purchasing more professional development options.

Don’t hesitate to purchase professional development books between your courses.

Outsource Non-Revenue Generating Tasks

Non-revenue generating tasks (NRGs) are tasks that must be completed for your business to move forward but don’t directly impact your client work.

For example, marketing tasks like posting to social media and drafting blogs play an important role in advertising your business and reaching new leads.

However, if they don’t get completed one day, it won’t have a direct impact on your profits.

Conversely, ensuring deliverables get to a client by a deadline will impact your profits and future work.

Reinvest money in your business by outsourcing the NRG tasks you’ve been neglecting as you focus on client work.

Better yet, stop doing the NRG tasks you’ve been handling so that you can take on more clients and increase your revenue.

Consider hiring a virtual assistant or marketing consultant to handle some of your NRGs.

Negotiate a scalable work approach so that you can delegate more work as your business grows and expands.

Software Solutions

Fortunately, there are many tasks that you can delegate to the robots. Automation has become a controversial subject, but it can make all the difference for entrepreneurs and small business owners with limited resources.

Reinvest your money into software solutions that aid in keeping you organized and on track in your business.

Many SaaS platforms offer a tiered pricing system that starts with a free version. Use these when possible, and upgrade as you have the resources and need.

Make Strategic Upgrades

You can also reinvest money into strategic capital and equipment upgrades in your business.

These upgrades could range from purchasing a new computer when your existing laptop starts to act up or investing in an ergonomic office chair.

The key to making strategic upgrades is to be frugal, not cheap. Invest the money in things that will make your business better without being frivolous.

Business Expansion

Eventually, you’ll reach a point where you’ve done all you can in your existing framework.

You won’t be able to increase your product production without another factory or expand your service line without hiring a team.

Reinvesting money to expand your business is a fantastic use of funds. Be strategic, create a financial plan, conduct market research, and make things happen.

Improve Debt Ratio

If you’ve borrowed money or used the financing to get your business off the ground, you’re not alone.

It’s entirely normal and acceptable to seek funding to start a business and cover the upfront costs.

Once you start making money, however, you should put extra into paying those debts down and improving your debt ratio.

Use your profits to increase your monthly debt payments. This activity will also help improve your business credit score and set you up for success should you seek additional funding in the future.

Purchasing Stocks

If you have an LLC, you can purchase stocks on your company’s behalf. Depending on your business structure and long-term goals, you can use this strategy to increase equity in your business, offset taxes, and create a retirement plan.

Creating a Donation Fund

Finally, consider reinvesting in your business by paying it forward. Consumers expect brands to be philanthropic and socially responsible.

Giving back is a great way to offset taxes and network in your community. In essence, creating a donation or giving funds is a form of ethical marketing.

Conclusion

Choose a cause that aligns with your company values and mission statement, and redirect funds toward philanthropic endeavors. 

With these simple strategies, you can reinvest in your business to promote long-term success.

____________________________________________________

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