The biggest roadblock in making this decision is if I should invest more money for my business in this particular area.
Making this decision for me is part emotional and part financial.
What do I mean? I am trying to figure out the right balance between perseverance, perfection and making sure the investment pays-off.
Being a business owners is a fine balance between believing in something when others don’t, sticking with your goals and at the same time not ending up bankrupt.
Here are some of the questions I ask myself when I am evaluating business investments:
I don’t actually want you to go get an outside opinion, all though that can be good, instead I want you to look at the invest as if it was not your business.
If this was your friends business, would you invest your money in this?
If the answer is no, ask yourself why. This can shed some light on problems that you did not think about for your investment. It also has you look at your business objectively vs emotionally – after all most of us feel like our businesses are another child!
Have you calculated your return on investment? Will this purchase actually increase revenues or decrease expenses over the long term?
Before you make an investment, make sure it will pay off!
You can calculate the return on investment with this formula:
ROI = (gain from investment – cost of investment)/cost of investment *100
This will give you a percentage of return for your investment. This of course is an estimate, but you should still try and figure out what it will bring in before spending the money. (For more on How to Calculate ROI)
Spending money too many times without making sure it pays-off will make your business go broke! (Click to Tweet!)
Sometimes in business we get so excited about what we are working on, and what our business owner friends are doing that we forget to stop and make sure we really need something.
I know I have done it where I find a class on some topic that I have started learning about and jump right in and buy it, only to find out that it really is not what I needed. Yet if I had slowed down and asked if it was the right fit for my goal I would have passed on buying it in the first place.
Make sure you really need this to make your business successful.
Before you jump right in, figure out if there are other things that would work better.
Examples might be:
Try and brainstorm at least 10 other options for accomplishing the same thing without spending money.
This is where you need to trust the entrepreneur in you. Sometimes after analyzing and looking at all the options, your gut just has to say go for it.
There are many times when the numbers just don’t make sense, but you know it is the right thing to do. So do it!
Just be sure to make sure you don’t use this option all the time. You still have to stay within budget and at some point make a profit!
These questions should help you figure out if investing more money into your business is the right thing to do!