Opening a business is fairly easy nowadays, but it entails investment. Sustaining a small company and ensuring its profitability can be taxing physically, mentally as well as financially.
Depending upon the type of business you wish to enter, finding money can be fairly easy. You can fund it from your personal savings, borrow from relatives and friends, turn to crowd-funding, seek venture capital or apply for loans from banks and other lenders.
Why smart investing?
The key to success in any business lies in smart investing. This ensures you do not squander your money but make it work hard and earn maximum returns.
Failure to invest smartly could force you out of business and land you in serious financial trouble. You can avoid these hassles by following a few practical tips.
Smart Ways to Invest
Generally, every investor seeks advice from a finance expert. Sometimes though, these consultants charge hefty fees and their guidance could be flawed. Here we present 8 smart ways to invest.
Prioritize Your Business’ Key Functions
Every business, large or small, has its own key functions. These include, but are not restricted to: research and development, quality control, production, logistics, advertising, sales and marketing, accounts, after-sales service and others.
Depending upon the nature of your business, it’s important to identify your key functions that are required to popularize products and services, while also ensuring optimal profits. Draw an estimated budget required to start and aim to maintain these key sectors of your business.
Your business budget should include the costs on equipment and other material required to ensure the smooth functioning of your business and its key departments. Seamless operations are required for any
business to make a mark in the market and succeed.
Usually, new entrants are confused about how many employees to hire.
Often, they hire too many hands, believing it would help their business. But too many employees increase your payroll expenses.
Other times, business owners employ too few employees, expecting everyone to multitask. But few employees means your staff will be stressed out. Invariably, this leads to attrition, which in return means you need to frequently recruit and train new employees, causing a drain on your already limited resources.
One more smart way to invest in you business is to arrive at a realistic figure about how many employees you genuinely require.
Draw estimates for the salaries you need to pay. Alternatively, you can hire experienced staff only for the vital functions, while recruiting trainees or part-timers to handle other tasks.
If possible, hire telecommute workers. A 2015 study by FlexJobs indicates, employers save on average, $11,000 per year by hiring telecommute employees rather than office based workers. Hire freelancers, if keeping employees on payroll can prove to be too expensive.
Advertising and Marketing
Advertising and marketing strategies form the backbone of a business.
However, inserting ads in print, electronic and digital media is often expensive and can take a severe toll of your investment.
Nowadays, small and large businesses are increasingly turning to blogs and social media as well as instant messaging services to reach clients, instead of conventional advertising.
Facebook, with its 2 billion subscribers, is by far one of the best ways to advertise and market your products to your niche clients.
Alternatively, tap Business-to Business (B2B) customers and trade associates through LinkedIn.
Advertising can be done by opening a YouTube channel as well, or you can use Twitter to share information about new launches and upgrades in your product or service offerings.
Invest smartly in social media to create interesting and intelligent content. This is vital for new businesses, since users often ‘share’ stuff they like with friends and other people they know.
Legalize Your Business
Regardless of the size of your venture, it is advisable to have the required licenses, permits and other documentation that provides complete legitimacy to your business. Understandably, this can be a lengthy procedure and could entail some investment.
Regardless, investment made in legitimizing a business holds several benefits.
You are shielded against any fines and penalties that may accrue due to violation of laws, as well as lawsuits. Additionally, a legit business attracts more customers and business associates, and that translates directly into higher profits.
Should need arise, you can seek bank loans to expand the business and avail legal protection.
Business Location and Premises
Yet another smart way to invest in a business is by cutting the costs of leasing an office.
It’s not uncommon for small companies to start with an office based at the owner’s home.
This saves you a large chunk of your investment that otherwise would be spent on leasing expensive office space.
Having an independent office outside your home is advisable, but provided you require a lot of staff to run the business.
Also, you could look for economical, yet reliable warehousing services, if needed for the business. However, any warehousing facility has to be easily accessible for the faster delivery of products. The same holds true for logistics.
Invest on Technology
Technology is a key driver for all businesses nowadays. Investing in the latest technology in any field is now important for every business.
Technology can prove to be a decisive factor in the success or failure of an enterprise. Explore the best technology driven solutions available for speedy product and service delivery.
Additionally, investing in the latest software or gadgets required for troubleshooting and efficient after-sales service will create a healthy market reputation that will eventually result in higher profits.
Stash away some of your investment money in hedge funds and saving plans offered by banks and financial institutions.
Hedge funds allow your money to earn some interest. The saved amount serves as a reserve for the business to draw from, should you wish to venture into newer markets or increase your service offerings.
Additionally, they also provide a buffer of sorts against economic downturns or market uncertainties.
Reward Productivity and Performance
A common problem that affects a new business is poor productivity and poor performance from employees due to lack of experience.
You spend heavily on training new recruits to fit into your business model and begin producing desired results. Hence, it is essential to invest in rewards for high productivity and excellent performance.
Keep aside a small portion of your investment for constituting a rewards scheme that makes employees feel appreciated and encourages loyalty towards your business.
Here are a few more tips for smart investment.
Do some research into the existing market to find offerings by small and large competitors, their pricing structures and incentives schemes. This will help you better plan your investment.
Use network marketing or multi-level marketing as one of the channels for delivering your products or services. Network marketers require some basic training before they promote your stuff. Investing in this type of coaching can prove to be rewarding to your business in the long run.
Running a successful business requires knowledge.
With smart investments, your business stands a better chance of making it past its teething troubles and become a flourishing, profitable venture.
According to various studies, over 90 percent of start-up companies fail since their founders did not invest accordingly.
The above tips and advice on smart ways to invest can help you be better prepared to venture into a profitable business.
It is vital to make smart decisions to ensure your company does not run into losses soon after launch.