Many business owners don’t like to part with their money and with good reason. The constant barrage of vendors who want a piece of your cash pie can cause you to cling tightly to the purse strings. But have you ever considered that you could be missing opportunities to invest in your businesses and turn some of that valuable cash into even more cash?
It’s called Return on Investment (ROI) and many big companies go to great lengths to evaluate the ROI of large expenditures such as technology purchases and real estate transactions. But for small business owners who are worried about cash flow, ROI can be an important consideration when parting with just a few hundred dollars.
The cost of advertising is one area where ROI should be considered. Some business owners view advertising as a business expense when it should really be considered an investment in your business. If done right, the dollars spent on spreading the word about your business should come back to you. Though it doesn’t make sense to spend thousands on an ad that will only generate a few hundred dollars in sales, it does make sense to focus your efforts and spend what you know you can earn back.
For example, if you spent $100 on a classified ad in a publication that reaches your target customer base and your average customer spends $20, you need only five people to respond to the ad to make it worth the investment. And don’t forget about repeat business. If you have a quality product or service, your customers should return again and again so you can afford to invest even more to attract new customers.
Trade associations are another overlooked investment opportunity. Let’s say your local Chamber of Commerce charges $250 per year. This may seem steep but you could actually earn that money back. If you participate in networking events, you could develop partnerships with other business owners that could pay your membership investment ten times over.
Also consider the benefits that come with membership. If the Chamber offers discounts of 20% on office supplies, and you spend $2000 per year on supplies, you could save $400 on supplies alone. Many associations offer discounts for members on a variety of products and services including insurance, copying and printing, shipping, and industry-specific products. When considering joining an association, be sure to evaluate the benefits and opportunity to save. You could find that your membership dues are actually a bargain.
Books, information products, and education provide additional opportunities to invest in your business. If you spend $20 on a book, even if you only learn one new strategy from reading the publication, that strategy could potentially earn thousands in the long run.
Have you ever spent hours struggling with a software program that you don’t fully understand? Investing in a three-hour class could potentially save you countless hours of wasted time–hours that could be used to generate revenues.
Speaking of hours, consider what your time is worth. If you earn $100 per hour for consulting, and you spend five hours per week working on paperwork, you’re essentially spending $500 a week–or $2000 per month–on this tedious task. Instead, you could hire a Virtual Assistant or part-time employee to handle your paperwork. If you can hire someone for less than $500 per week, you will actually save from your investment.
So the next time you’re faced with a business expense, instead of viewing it as another nuisance, look at the opportunity. Ask yourself the following questions:
*What is my time worth?
*Will this investment save me valuable time?
*Can I generate enough sales to pay for the investment?
*Are there benefits such as discounts on products and services that will pay for the investment?
*What hidden benefits are involved? Will I be able to take advantage of networking opportunities, exposure for my business, or generate business leads?
Sometimes we have to loosen up the purse strings in order to fill it with even more cash. By evaluating each opportunity to invest in your business, you could reap some tremendous rewards.