Many small business owners don't reinvest profits into improving their business. I have often fallen into this cycle in the past. For the past year, I have constantly reinvested a portion of the profits of my earnings into the improvement of myself and my business. Why? Sometimes, as small business owners, we stand in the way of the SUCCESS WE DESIRE. When I realized I was doing this, I had to improve my knowledge of one the most important skills in my industry. That one investment made the biggest difference in the quality of work being put out to the general public.
Risk vs. Investment
An investment is a risk, but a risk doesn't necessarily equate to an investment. An investment is a calculated risk that usually has an upside on more than one level. Gambling is pure risk. The upside is very high and the risk is even higher. Many people start a business without the proper training and never develop the necessary skills or train/hire qualified help and often wonder why their business doesn't succeed. In my opinion, this is one of the main reasons many small business are not profitable. They are gambling.
Understand that your business is an investment. One of the best investments I ever made in my life was publishing my book, 99 Questions You Must Ask A Man Before Sleeping with Him & Definitely Before Having SEX. In retrospect, to many it was not a gamble. However, I knew how to what to do to make sure it was an investment that would pay me for many years to come. This in my opinion is the definition of a good investment.
While there is risk in most investments, there are those investments that will pay you for many years to come, even if the initial financial investment may seem risky. Often times, you can't afford to NOT make certain investments in your business. Therefore, continuous, yet CALCULATED investments are worth it. And, doing this will pay you; even if what it pays you is a lesson of exactly what NOT to do.
Here are a few investments you can be sure are worth doing so on a continuous basis:
1. Marketing/Branding - This is one of the most important acts you can place your money into that even when it's terrible, will pay you in some kind of way. Major corporations are major and don't always have the BEST marketing, but they are constantly marketing themselves to the public or their niche market. I talk more about the importance of marketing in many of my other blog posts. Read through the others to find out more.
2. Customer Retention - Retaining a customer is often more important than trying to gain a new one. One customer can pay you thousands and thousands of dollars for many years. Sometimes, small business owners want to take care of the one large customer who pays a large fee for a product or service every once in a while, and end up neglecting the repeat customer who helps keep the doors open and cash flow coming into the business. Both are important. However, cash flow helps solve many of the financial problems in a small business.
Invest in retaining your loyal customers and they will be one of the most effective pieces of marketing, advertising and branding for your business.
3. Training - Many small business owners do not invest in the training of ourselves and/or our customers because it costs money and time that is often needed to keep the business running. However, this is the one thing I did to improve both the quality of work and level of output last year for my business. A few hours a month with your team or self, training and improving knowledge and skills, will be time and dollars well invested. It will usually make you and your team more efficient and effective.
Until next time....