Budgeting for Growth: Investing in the Future of Your Business
You can own a small business and feel successful — but also a little stuck. Many entrepreneurs feel this way after launching and reaching a point where they earn a profit, but they're no longer growing.
Earning a profit may be good enough, for now. But you may also want to push for continued growth, and turn your small business into something much bigger.
Taking your business to the next level can feel even more daunting than getting it off the ground. If you're ready to expand, it pays to first lay the groundwork and start budgeting for growth.
Here's how to start investing in the future of your business.
Reinvest Some of Your Profits
The first step you need to take? Determine how much of your profits you want to plow back into the business. The exact amount depends on your goals and how fast you want to grow — but also on your situation.
As a small business owner, you might have other obligations outside of your entrepreneurial role. A certain amount of your profit might need to go toward your household income, for example, to support your family. The amount you can reinvest into your business may be different than for a small business owner who is single, in their 30s, and can live off a smaller sum each month.
Some entrepreneurs suggest investing a full 50 percent of your profits, but others are less aggressive, and point out that the exact percentage of profit you should use as business investments depends on factors such as:
- Your personal expenses
- Your goals (and what success looks like)
- The other investment opportunities outside of your business that might be available to you
- How fast you need to grow to survive
Carefully review the matters that influence your growth potential, and what you can realistically invest in growth. Then set aside that money as your growth budget.
Invest in Yourself
Once you decide how much of your profit you can use when budgeting for growth, you need to choose where to invest. A good place to start is investing in yourself by hiring a business coach.
Learning from someone who has already done what you want to do can be invaluable. A business coach or strategist can guide you along the way, shine a light on your blind spots and help you make decisions. This becomes even more critical as your business grows, as you need to make more complex decisions.
Explore New Ways to Market Your Business
You need a sustainable pipeline of leads if you want your business to continue to grow. For a more robust pipeline, make a serious investment in marketing your business.
If you've been marketing for a while, you'll need to try out new methods, strategies or campaigns to up your game. Instead of sending direct mail or relying on cold calls, for example, explore content marketing, which means using content to attract customers. Think blog posts, social media posts and offers (like a free ebook or an exclusive coupon). Content marketing can be a highly effective way to forge relationships and build trust with the people you're hoping to serve.
Support Your Staff (or Get Support Staff!)
If you have employees, they are some of your most valuable assets. Invest in them by providing them with useful training that helps them increase their skills and knowledge. To protect your investment for the long run, think of unique perks you can offer that they value but don't cost you much to provide. Everyone likes flexible schedules and opportunities for remote work — offering those perks may increase the chance your employees will stick around.
No staff yet? Hiring your first team member may be scary, but it can be a good move. You can't do everything, and the right hire can speed up your growth.
Don't feel pressured to hire someone full-time, though. You can start by outsourcing and hiring someone on a part-time or contractor basis, then increase their hours over time. That way, your business can keep pace with the added expense.
Remember, It's Okay to Grow Slow
Taking on investors or outside funding can make it easier to experience rapid growth, but that's just one path to a bigger business — and pouring too much money back into your business can actually sink it if your investments don't work out.
As you begin budgeting for growth, you want to make sure the money you spend can provide a return on your investment and be an expense the business can sustain. One way to make sure you're not getting ahead of yourself (and in over your head) is to only considering recurring revenue (income that comes in every month) as income you can truly count on.
Think strategically, plan ahead and invest with some caution. Slow and measured growth is often the key to long-term success as a small business owner.