Making Money – Here’s How to Grow it!
Editor’s Note: This article is part of a bigger series on supercharging the growth in your business. To start at the beginning click here – Nine Critical Strategies to Grow Your Business in 2020!
The last article we focused on inspiring employees. We touched on 4 things that you, as a leader, need to do to motivate your employees. What’s great is by empowering and motivating your employees you’re sure to see your business grow.
Remember, with business growth comes profits… and if you’ve been focused on your business… profits should be climbing.
You should be hauling in buckets of money.
Remember – way back at the beginning of this series I said “THE FIRST THING IS PROFITS!”
If you’re in business and not generating profits something is wrong.
If your business isn’t throwing off profits, go back and review this article about tracking your numbers…
I’m going to assume your business is starting to throw off cash. And that brings up a big question… What do you do with that cash?
What Most Business Gurus NEVER cover.
I follow a lot of business gurus.. And I’m shocked most never cover this topic.
They’re all focused on growing a business, expansion, getting bigger… They’ll talk for hours about your business and processes and marketing… but they never cover what to do with the money after you earn it.
It seems to me they’re so focused on business they don’t understand the end goal of business is making money.
Today, I’m going to answer that question for you!
What should you do with your PROFITS?
Seriously, what do you do with your money?
Do you spend it? Save it? Invest it?
Do you let it build up in little piles under your mattress?
Do you hoard it like Scrooge McDuck (anyone up for a swim in their money vault)?
The way I see it, as a business owner you have 4 choices. You can:
- Reinvest in your business
- Spend your profits
- Invest it for the future
- Give It all away!
I want to look at each one of these in depth and give you my thoughts. Keep reading and you’ll probably learn something interesting!
One Overriding Idea about CASH…
Before I get into my ideas about spending your cash… let me make one thing clear… This decision needs to be unique to you.
For example, if you’re 70 years old and don’t have any retirement savings… for gosh sakes, put some money away for retirement.
If you’re 23, single, and are focused on growing your business… still put some money away for retirement… but you don’t need to save as much as a 70 year old!
If you’re in your 40s and you’ve got kids expecting you to pay for college… Well, I know where you’ll be spending your money (Build that college savings account!).
So, just remember as I discuss the 4 options you have on spending your profits, you’ve got to take your own life situation into the decision.
Alright, let’s jump in…
Reinvest in Your Business
This is one of the biggest ways to grow your business… take the profits you earn, and reinvest them in the business.
Maybe you bring on more employees, spend more on marketing… or buy needed capital equipment.
Maybe you stash a little extra in the bank account for a rainy day.
Here’s another big idea… Maybe you buy a competitor.
Don’t laugh, I see it all the time.
You already know who your competitors are… maybe one is struggling. You can swoop in and buy their customer base for pennies on the dollar.
It’s an amazing way to grow your business with minimal investment.
I love reinvesting in my business… However, sometimes the business throws off cash, and you really don’t have a great way to reinvest. Don’t worry, that’s fine.
Just don’t force a bad decision.
Instead, take your money and do this…
Spend Your Profits
Yep, you heard me right.
You’ve worked hard to make money… take some of it (not all of it) and spend it on something that makes you happy.
Maybe it’s a week in Europe, or a vacation to the beach… or a new sports car.
Maybe you splurge and buy tickets to the SuperBowl… or a new wardrobe.
If you’re really making money, look at buying a new house, or a vacation home.
Spending your profits is the easy part… but just show some self control.
One thing I’ve learned is that company profits are often volatile. One month you’ll be rolling in it… and the next, you’ll be wondering how to make payroll.
And that’s why this next idea is so critical.
Invest it for the Future
Not many people know this, but I used to work on Wall Street.
I’ve seen the richest of the rich, and had dinners with Billionaires!
And, let me tell you, having money is much better than being broke. That’s why I always put aside money for the future.
Since I’ve started my working career, I’ve always put aside some of my earnings to invest for the future.
There’s a few reasons why this has been a priority…
First, I love stability.
Knowing that I have a chunk of cash and investments sitting aside, gives me comfort when running my business. I know if we hit a rough spot, I’m OK financially, and it gives me the strength to make decisions for the long term.
Second, I know retirement will be here quickly.
It’s a fact of life. If you don’t die early, you’ll need to pay for your retirement. And the sooner you start saving, the easier it will be. Money will grow money… and retirement can be soft and cushy.
Third, I’ve got the ultimate parachute.
This sounds crazy, but I know by putting money aside… It allows me to really enjoy life. I know I could never work another day in my life, and I’d be OK. This allows me to invest in riskier things, spend money in ways others can’t, and help others. (More on that last point in a bit).
Alright, I’ve convinced you to set aside money for the future… if you want to invest the way I do, here’s what I’ve done.
How to invest for the future.
Here’s the first rule… you can’t ever save enough. So start by maxing out your retirement plan. Don’t have one? Call your accountant right now and figure out how to jam as much money into your retirement plan as possible.
MAX. IT. OUT.
Then take some extra money and start investing it too. Think of these other accounts as retirement accounts…
What to invest in?
This is what I buy… Dividend stocks, Real estate, and I invest in businesses I own.
It’s that simple.
I started buying big name, well run businesses, that trade on the US exchanges. I took all the dividends I earned and bought more of these stocks. I took extra money I made and bought still more stock.
What’s the secret I used to pick these stocks?
I looked at them and said, do I want to own this company in 40 years. Do I think they’ll still be around and paying dividends. When I found those companies I bought.
After a few years, I had a nice portfolio.
That’s when I expanded into real estate. I simply bought a small home in a good neighborhood and found a property manager to manage the tenants for me.
Then I bought another rental… then another…
Here we are years later and while I have not “Made” much money from the rentals, the cash they throw off has been used to pay down the mortgage.
Now I’m about to own these houses free and clear. Amazing right!
I’m working my way up the food chain… After finding success with these rental homes, I recently invested in a hotel. A crazy thought right!
I started small and now my portfolio is growing and growing. You can do the same thing… And I think you should!
After you’ve put aside a nice big nest egg… you’ll start to see things in this world that need to be fixed.
And that brings us to the fourth and final way to spend your profits…
Give It ALL Away!
This will be controversial, but I do think giving away some of your money is important.
No, you don’t just need to give it to any charity… I recommend you look for an organization you believe in and support.
Find an organization that you can get behind and support not only with your MONEY but also your TIME.
I recently joined the Board of a non-profit… and now I’m the Chairman. I not only get to make a difference, but I see that my donations are going to the right people, for the right reasons.
Don’t underestimate the impact you can have by donating your time too!
This role is not only a good one, but it also is emotionally filling too.
You’ll feel a warmth inside when you donate your money and time, and frankly, it becomes addicting.
Oh, here’s a crazy bit of Data… did you know Betwext.com is used by a ton of nonprofits? They use texting to communicate with donors, their volunteers, to raise money, and to promote their organization. If you know a non-profit who could use text marketing, have them contact us, we offer special non-profit rates!
Putting it all together.
Remember, running a business is all about profits. The green dollar bills you can take to the store and spend.
I’ve given you 4 ways to spend your profits… Reinvesting in the business, buying stuff, Investing for the future, and supporting charities!
As you make more and more money, you’ll start splitting your profits between these 4 groups… and at the end of the day, remember – spending your profits needs to be adjusted for your own life circumstances!
Now, what’s next?
Next, I’m going to slay a sacred cow when it comes to work life balance.
I’m going to tell you the truth about how you can achieve balance in all things.
To go to the next article: Click here