Last Updated on Jul 27, 2021 by James W
From your initial business idea, to drawing up a fully realised business plan, to your very first sale, your business is full of milestones being achieved along the way. Once you start to experience successes, no matter how small they may be, you will want to start thinking about how you can help this continually grow. What are the obstacles you need to clear to move into the next stage of your company vision? One way you can help the business grow further investing back into it, either from your own finances or from outside sources. Here are some quick tips on how to get started with business investment.
Review Your Finances
If you are looking to put back into your business, you will need to ensure you have the cash to do so. This means your personal finances need to be up to speed and you can afford to pour your own money into the business. Whilst some business owners may forgo paying themselves a salary to put the money back into the business, not everyone will be able to do so and has essential bills to pay. You will need to work out how much your total essential outgoings are and ensure you have enough to cover these each month. From the rest of your disposable income, you can plan how much you can afford to invest and how much you want to put into savings.
You should have an emergency savings fund to cover anything unexpected, such as a car repair bill, or if not, you can look to use a flexible payday loan to borrow what you need and settle your situation quickly. Either way, you want to ensure you can afford to cover life’s unexpected events and not fall into financial difficulty doing so.
Understand Your Cash Flow
Aside from your personal finances, you need to have a good understanding of your cash flow and where most of your expenses go. This will help you see where investment is needed and if any part of the process can be streamlined and made more efficient. If you are generating profit after all fixed costs are covered, how much of this can you comfortably reinvest? This can be ideal meaning that money invested is coming straight from money generated rather than your own pocket or outside investment. You can also think ahead and forecast your cash flow, so if you know you have a large order on the horizon, you can then reinvest your expected profit before then through a business loan or your own money.
Plan What Your Investment Will Be For
You may want to invest back into your business, but have you defined exactly what this will look like? Creating clear goals will help focus this, so for example, if you want to branch your business out into offering multiple services, what will you need to achieve this? You’ll then be able to work out how much investment is needed for this and what you will then do as soon as you have that money, whether it’s to bring in more staff, a particular set of equipment or a larger premises. Planning what these investments will be will provide a focus on sales or how much outside investment you will need. It also avoids too much one-off expenditure with the profits you do make, planning ahead exactly how you want to use the money.