Start-Ups: How To Get A Return On Your Investment

The observation that you need to spend money to make money isn’t wrong. Having good seed money is important to starting any business; you’re going to have to pour large sums of money into your business’ infrastructure at the outset, whether that means buying a facility, purchasing equipment or raw materials for your employees to work with, or finding good software (or creating your own).  This isn’t just something that you’ll do as you start up your business, either. Throughout your business’ life cycle, you can anticipate needing to seed money back into your business for things like rent, materials, hiring, and employees’ wages.

For a new business owner, the amounts of money you can find yourself seeding into your company can be intimidating. How can a business owner be sure that they’re going to get a return on their investment?

First off, it’s important to make sure that you’re investing wisely. There are plenty of things that a business may not need at the outset. Don’t fall into the trap of thinking that you need it because “real” businesses have it. Your company is a real business! Even if you’re interested in attracting investors or getting media attention, you don’t need to drop your business’ money into, for instance, a sleek, modern campus for your workers, or stock options. You should only think about things like that later on, when your business is better established and has better cashflow than it does at the outset.

Secondly, consider where you can cut costs. This is not to suggest that you short your employees, cut corners, or otherwise do things cheaply. Rather, some businesses get wrapped up in purchasing the biggest or best version of something — a software package, a building they’re renting or purchasing, or the like — that they may not need right away. They may need this later on, and if they have the cashflow it may be worth getting it right away, particularly because getting something larger often means “buying in bulk” and saving or not having to repeat a purchase (such as buying an entirely new, larger facility). At the same time, it may not be worth it to spend that kind of money on the outset. Be sure to weigh your options.

Finally, just like how you’re investing money, keep in mind that you’re investing your time and attention as well, as a business owner, manager, and planner. So many employers think of manhours in terms of what their employees are giving to the company, rather than as a matter of what the employer is putting into the company himself or herself. Even for skilled management professionals, it’s easy to get distracted by an issue that seems fun or easy to them, which isn’t actually important to act on right away. Take a moment to consider: is a given issue worth your time and attention in the early phases of planning your business (or, for that matter, later on)? Can you point your attention toward something more immediately important? Doing this can save you a lot of headaches later on.

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