Spending Money to Make Money in 2019

Wednesday, June 26, 2019, 6:00 PM | Leave Comment

There is an old adage that says you have to spend money to make money.

That’s not necessarily true as is proven every day by hard-working individuals who managed to turn great ideas into a viable income without having to borrow a pound.

But there are certain kinds of business enterprises that absolutely require significant spending.

And if you do not have the money in the bank, that money has to come from somewhere.

Where the ‘spend money to make money’ adage applies, it is a different world in 2019. Business financing is not the same today as it was 50 years ago.

Everything from start-up business loans to venture capital has evolved to account for the way the world does business in the digital age.

The task for business owners is to master the concept of spending money to make it.

  • What Are You Spending On?

    The first task for business owners is to step back and assess what their financial resources are being spent on. You can spend money to make it, but you can also spend money foolishly. Not every expenditure is good for the bottom line. Not every expenditure helps make money – either directly or indirectly.

    Something as simple as office furniture can make a big difference. Consider a new digital marketing start-up with a full bank account thanks to several business loans ownership was able to arrange. That company could go out and spend a fortune on brand-new office equipment and furniture. But is this sort of expenditure justified? Can the company get by with used for the time being?

    Perhaps a brand-new conference table is warranted so that company reps can entertain clients in the right atmosphere. Maybe a state-of-the-art furniture and equipment package for the reception area is also warranted. But back in the office, were the work is being done and visitors are unlikely to traffic, staff can be just as productive with used equipment and furniture at a lower cost.

  • Are You Controlling Your Success?

    Some businesses fail in the spend money to make money arena because ownership has not taken control of the company’s success. Rather than maintaining ownership over every aspect of success, a company is hoping that adequate business financing will make everything turn out okay. That is not the way it works.

    When small business owners rely entirely on business loans as the sole determiner of their success or failure, they end up being controlled by those loans. That is never good. A company controlled by its financing is a company that is not really free to go out and seize the market.

    This can be problematic when you consider how quickly some companies in the digital era have risen to unprecedented levels of success. Growing quickly means being nimble and flexible. It means responding to market conditions as they unfold. A company cannot do that if it is being controlled by its funding sources.

  • Who Are You Borrowing From?

    All of what you have read thus far brings us to the inevitable question of who a business is borrowing from. Lenders come in all shapes and sizes. You have commercial banks, private lenders, venture capitalists, angel investors, and on and on.

    A company’s source of funding plays a big role in everything from the cost of borrowing to maintaining cash flow and the actual control of day-to-day operations. Your typical small business needs relationships with several lenders in order to meet different kinds of financial needs. The right collection of lenders can make meeting financial obligations a lot easier.

  • Are You Borrowing and Spending Wisely?

    There are definitely some kinds of businesses that require spending money before you can make any. You may have to spend money on office equipment, network infrastructure, labour, etc. And once again, you may have to borrow if you do not have that money sitting in your bank account. The overall question is this: are you borrowing and spending wisely?

Spending money to make money in 2019 works best if you are borrowing from the right lenders and spending the money on the right things. Countless numbers of businesses have taken the old adage and relied on it to turn small-time operations into large companies with a worldwide reach. But they did not do so haphazardly. They borrowed from the right partners and spent the money wisely.

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