Gain Positive Return on Investment on Your Most Important Business Expenditures
When it comes to managing your business finances there are daily decisions that you need to make. Whether it’s paying employees, purchasing equipment, or processing payments, you will regularly check your cash flow. How much comes in and how much goes out.
Let’s talk a little bit about what goes out. Sometimes you need to spend some to earn some.
While keeping expenditures low is a good general strategy, there is definitely the chance of being too restrictive when it comes to spending. Your business feeds on cash. You need it to function, grow, and earn new contracts.
There are good expenditures. They are the ones that bring you a positive return on investment.
Here’s how to turn your 3 biggest expenses into good investments:
1. Investing in the Right People
No business is anything other than the people in it.
That’s why it’s critical to get the right people into the business and the wrong people out. As a small business you should be “hiring slow, firing fast.”
Does that sound crude? “Firing fast” could imply you are using and disposing of people. This is not what that means though.
What “firing fast” means is that you can’t always know who is a good worker or a good fit for your business from a resume and an interview. Sometimes, your instincts or opinions about a person were wrong. Sometimes life changes. So does business culture and employee attitude change. It’s not because there is something wrong with them or you – it’s just simply a poor fit!
It most certainly can be difficult to measure how much value an employee brings to your business. That’s why there are a plethora of books written and companies created on managing employees.
Bottom-line is that your people should be building the company up in both profit and reputation. If you’ve got your eyes open, you’ll identify quickly who your contributors are… and who needs to find a better fit for them.
2. Marketing and Advertising
Do you get a visceral reaction when you hear the words “marketing and advertising?” You are not alone!
At its core, marketing and advertising is just about telling people you are open for business. It isn’t about tricking people into buying something they don’t need or want. Good marketing is simply about finding the right potential customers and explaining your value to them clearly.
No matter how big or small your business may be, you can benefit from marketing and advertising. Marketing is one of the best ways that you can go about expanding and growing your business.
These days, marketing is fairly easy to track. You should pay attention to how much new and return business you can attribute to your marketing efforts. Consider the amount you spent versus the amount you made. If it’s positive, good! If not, stop and try something else.
Regardless, a well-tested and run marketing campaign can provide you with one of the best returns on investment you may ever see.
3. Purchasing Equipment and Technology
Your business probably relies on some sort of equipment and/or technology to run.
Getting the right equipment and technology in your business can increase profit in 3 ways:
- Secure your core business success (for example, you need to have an excavator in order to run an excavation company).
- Complete tasks more efficiently and in less time. This allows you to take more work in the same amount of time, or complete work faster increasing your dollars per hour profit.
- Allow you to expand into new markets and capture additional contracts.
Equipment and technology is constantly changing and evolving. Obviously you cannot just buy a new tractor or computer every time the technology is improved upon. You can benefit from updating your equipment every 5 years though.
Equipment leasing can help you do just that. Leasing your equipment and technology is first and foremost a smart expenditure. You can secure your core business success, make your business run more efficiently, and get new contracts and revenue coming in quickly. All without investing much cash up front!
On top of that, there are serious tax benefits to leasing your equipment, as you can usually write off your lease payments. This is a great example of how to spend to grow your business.
Are You Going to Spend to Grow?
Spending money in your business is not bad. It’s what your business feeds on. What you spend it on is everything. Are making good expenditures in your business today?
Do you have the right people? Are you running effective marketing and advertising? Do you have the right equipment to function and grow?
Thomcat Leasing makes finding and financing your equipment purchases fast and easy. You’ll get low payments on the equipment your business needs to function and grow. So, when you are ready, give us a call!