Money makes the world go round, especially when you are a small business owner who has yet to enjoy the cult status of being a local legend. You need to make ends meet, reinvest in your business, and yet still manage to pay your employees and keep your family afloat. This requires a healthy profit, and some smart money management. Even if you could say that you are comfortable now, you cannot rest on your laurels. You need to do all you can to invest in your future so that when times get tough, you have the right support systems to keep you upright:
Personal Investments to Keep Your Finances Stable
For small business owners, your company is your entire investment. You often have all your hopes riding on its success, so if there is a slow month, you will be the one to take out of your own personal savings to keep it afloat. This is not sustainable, nor is it smart. Don’t put all of your eggs into one basket and instead try investing:
Into Real Estate
Your first home should be thought of as the first rung on your real estate ladder. If you decide to move later on, see if you can work out a way to keep both your old home and buy a new one if the rental return is good enough. This way you can cover costs and eventually bring in a healthy passive income. Hire the right people to manage the property, and you don’t have to do any work at all, so long as the rent covers all of these costs.
Into the Stock Market
Where there is risk, there is the chance of great reward. This isn’t to say you should ever invest money into the stock market that you are not prepared to lose. If things go south you should be financially secure, still have an emergency savings fund, still have your retirement, and still have all of your other assets. Do this, and the stress and worry of investing in the stock market will be a thing of the past. Instead, you can focus on making smart choices with a clear head. If you want to learn to trade, then start doing so. Get money calendar alerts first hand that will notify you of stock opportunities from companies that have a proven 10-year history. These stocks won’t likely see a huge influx of value, but for first-time traders, they are the perfect way to dip your toe into the stock market waters.
Into an Emergency Fund
This emergency fund should be separate from your checking account, but different from your retirement savings. Essentially it should be there to cover your expenses during a financial setback. You can set an emergency fund up for your business as well, often referred to as reserves so that unexpected costs on that side of your life will be covered without you touching your family’s personal emergency fund. Generally speaking, you should have enough in this fund to cover your costs for at least three months, and continue to save until you have reached this goal.
Into Your Retirement
As a small business owner, you need to worry about both your own retirement and that of your employees. Be fair on both ends, and try to start early. Make it easy for your employees to start paying into their employer-based pension, and give them information on how to save further and how much they would need in order to lead a great life. By all means, this information is something you will acquire looking into your own options, so just pass on what you’ve learned so your employees can help themselves. Do this, and you can help them with their retirement even if they leave your employment.
Business Investments Every Small Business Owner Needs to Make
Investments you need to make in your business will vary. Having a healthy reserve and giving your employees a strong retirement plan are good places to start. The next step from there will then be to invest and innovate. No business can survive by holding onto the past. By investing in the following key areas, you can improve your company, lower costs, and increase profits:
Into Your Employees
Your employees are not stagnant machines. You do not need to replace them when they become outdated, and in fact, if their skills ever do fall behind your requirements, then you have no one to blame but yourself. You need to invest in your employees, train them, teach them, and sponsor them so that every single one of them can become better than the day before. You don’t need to outsource for new talent, you only need to give your current employees the tools they need to become the best in the business themselves.
Into Your System Processes
Organization and data management software has been a huge win for every business out there. It allows you to do more with your data, reduce admin times, and lower operating costs as a whole. Invest in new systems as they come out and are needed so that you can finally start making your data truly work for you.
Into The Tech You Use
The tech your company uses will depend entirely on your industry, but it is wise to keep an eye out on new tech releases. Work out a cost-benefit analysis to see if it is worthwhile in the long term to update to this new tech, or to wait for another model. For example, if you have an old printer in your office that takes up a lot of ink and power, you could end up saving a ton of money by switching to a more efficient and energy friendly model.
Into Your Branding and Reputation
Marketing is a never-ending struggle to gain recognition and to keep favor with your customers. Every company, from big to small, has to commit to it. Invest in a variety of marketing tactics and campaigns to keep your company well regarded and in the public eye.
Your small business needs to be financially secure. This means that you, the business owner, needs to have his finances in order so that you can improve the quality of your family life and the operation of your business. Reinvest your savings to better your outlook, and work on building a stable future.