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Most entrepreneurs find it inevitable that they should invest, but as to where to — that’s a question to which most of them do not find an answer to. Here are some ways to ensure that you make sound investments for your business and have little to worry about later in the way of investments gone sour or bad:
- If the investments are for marketing, look for possibility of returns: David Ogilvy, a famous ad man, used to say that he used to spend on marketing but he didn’t know which part of his money was actually working for his benefit. If the said investment is about marketing, check to see if you have adequate control on the returns that are possible. For instance, every dollar you spend for marketing online can be tracked and accounted for – this should make for a sound investment decision.
- Hire the best, or don’t hire: People are usually a very crucial and also expensive affair for any business. In that case, don’t look for cheap resources to get work done for your business; you will get what you pay for. Pay emphasis on training them adequately and focus on passing on the systems to them effectively. Look to squeeze a lot off your employees. The thumb rule is that you must be able to earn at least 35-65% more in profits per employee than what you pay them each month.
- Don’t invest in anything fancy: Don’t look buy fancy offices and invest in posh localities unless you are in retail. You don’t need fancy cubicles and you will very well be able to run your office without air-conditioning. You don’t need to arrange to have your employees picked up and dropped. You don’t need break-out areas at your office which would serve cool drink, snacks and coffee. You get the drift, don’t you?
Investments have to be made but they may not be best made on anything that doesn’t directly contribute to your company’s revenue or profit. All of the other spending can happen once your business is profitable, but until then spend with care.
Do you know of any areas in your business that you shouldn’t be investing on?
