Smart Ways To Invest In Your Business And Manage Risk

Get your investments right and you will reap the rewards.

When you work hard at your own business, the money you earn should do the same. Investment generally means looking at ways in which you can get your money to work for you, either through stocks, bonds or other financial means. However, money is not the only thing that a company invests in; personnel for example is a tremendous investment.

Successful businesses that grow profitably and sustainably at scale do so because they focus on key areas to invest and allocate their funds.

They do not spread their resources thin like jam on toast. Instead they are purposeful in the way they direct their money and investment. So, if you want to play in the big leagues of your industry, let’s take a look at three areas that require your investment and another three areas that you should overlook.

 

Must-have business investments that pay-off

 

1. Quality website

A great website with a brilliant website design is essential. In today’s digital age, your website is often the first point of contact for your business. It is the first impression a potential consumer is going to get. Therefore, it is worth the time and investment to develop a professional business website.

 

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Even if you have been in business for some time and started off with a website that worked well five years ago, technology and consumer behavior evolves over time. Get a web design and development professional to critically evaluate your site, ensure that it meets the needs of mobile users and that your content marketing is up to speed.

 

2. The right people

Getting the right personnel in place with an eye on rising stars and leaders should be next on your list. Mat Peterson, founder of Australian company Shiny Things, firmly believes in fostering innovation in the workplace. He gets the most from recruiting the right people and giving them freedom to challenge norms and innovate in the company.

 

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This requires a focused investment on recruiting and training to attract and keep great employees. Staffing is one of the largest expenses for companies, so you need to get it right. Hire a balanced team of individuals who will help your company grow. Meanwhile, develop a company culture that ensures they will stay and grow with you.

 

3. Infrastructure

Do you have the infrastructure to support growth? If business doubles tomorrow, do you have the systems, processes, people and tools in place to handle it?

Investing in infrastructure starts with considering what is necessary to support business operations. Look at appropriate workspace areas, review shared office space, and consider new technology to streamline workflow.

A business consultant can review your growth plan and advise on current and future infrastructure requirements so that you can plan when, where and how to spend your money.

 

A smarter approach to business risk

An integral part of investing anything, whether it is your money or time, is risk. You can easily risk losing your hard earned cash, or spend time working on something that does not give you a fair return in exchange.

However risk is a necessary part of business. A smart investor will take a measured amount of risks.

Here are a three guidelines to consider:

 

1. Avoid the ‘short-term’

Avoid investing in something short-term solely because it will give you a quick win situation. Consider the long-term impact. Often, founders invest in assets that will reduce income in order to reap a tax benefit. This will save money in the short-term, but it does risk how a business is perceived long-term. Companies with a strong profit stream are valued more than those with lower or no income.

 

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2. Steer clear of rhetoric

Do not succumb to the persuasions of a good salesperson and invest in untried and untested equipment, gadgets, and acquisitions that you know nothing about. Cut through the rhetoric and concentrate on investing in tangible assets that will benefit your company in line with your business plan and mission.

 

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However, if you are offered an opportunity to buy into something you know has legs then go for it. If it is an area where you lack expertise, then proceed with caution. As Warren Buffett once said, “Never invest in a business you cannot understand.”

 

3. Ignore the hype

If it looks too good to be true then it probably is; and investing without a proper financial plan and quality advice will only lead your company into difficulties. If you plan to invest in something that meets your business objectives, then ensure you understand and can articulate the risks, costs and liquidity of the investment.

 

As a business owner it’s important to do your homework. Make sound and timely judgements on where to channel your income, time, commitment, and your energy. Get your investments right, and you will reap the rewards.

 

This article has been edited.

Sal Salvatore is the Director of Minipack, Australia’s leading specialist in packaging machines and the original inventor of the Hooded shrink wrapping machine. As one of the country’s longest trading companies, Minipack not only understands the important role that good investment choices play in a company, but more importantly, the management team has also learned to spot an unwise investment when it is presented to them.

 

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