Why did you decide to start your own business? Like many entrepreneurs, I wanted to be my own boss, so that I could make my own hours, and have an unlimited cap on the income I could make. I love what I do, and am so passionate about helping business owners. But, I have bills to pay, and luxuries I love to indulge in, that require me to have money in my bank account. So, my goal is to run a profitable business that allows me to live the life I love while helping other women do the same thing. The truth is, money is something that terrifies many business owners. Looking at the numbers freaks them out. But, if you’re not dealing with the numbers, one day those figures will come and b*tch slap you in the face, and it won’t be pretty. The key to growing your business is to constantly take risks, and today I’ll show you how to know when to make an investment, and when to avoid taking a risk.
I know, investing sounds scary. There’s a chance the investment won’t pay off, and you’ll be exactly where you were when you started, with a big ol’ hole in your pocket.
But the thing is, if you never take risks, you’ll never REALLY get anywhere. Playing it safe didn’t get Beyonce to the top. It didn’t help Bill Gates.
If your cash flow is stable, the amount of time it will take you to get a return on your investment might not be as necessary. But if you’re business isn’t at a point where you can put up the money, and not stress about when it will come back to you, there is an easy way to calculate the risk, and decide if you’re willing to make the investment.
The key to knowing when to take a risk in regards to your money boils down to a few, totally non-scary questions:
- How many sales will you need to make to recoup the cost?
- How long will it take you to make the sales?
- Does your current cash flow support the investment?
So, let’s say you’re a photographer and you want to invest in some new gear, but you’re not sure if you can reasonably afford to spend the money.
Remember, running a profitable business, like being financially secure, is just a game of bringing in more than you’re putting out. Investing in your business doesn’t have to be scary if you know your numbers.
With that in mind, consider the amount you’re thinking of investing in your business, and then do the math and figure out how long it will take you to recover the cost.
If the gear you want to buy will cost you $2,000, and you charge $400 for a session, you will pay off your new toys in 5 sessions. If you’re booking five sessions in a weekend, awesome! If it takes you three months to shoot five sessions, the investment might not be a good one.
Now, if you think that by getting new gear you will be able to really up your game, it may still be worthwhile. But it is more of a risk. So be honest with yourself about just how much the new camera and other goodies will affect your ability to do your job well.
The same idea goes for getting into working relationships with other business owners, or purchasing a new course, or renting out a new space.
In my opinion, if a risk wouldn’t allow you to earn at least four times what you invested back, it probably isn’t worth it. Perhaps you have the opportunity to showcase your product or services at an expo. Calculate how much money the booth costs, what you’d spend on marketing, how much travel expenses and food would cost, and figure out if you’d make at least four times that number. If you’re not sure, do some research. If you’re unable to get a definite answer, decide if the risk (losing the money you put into it) is worth the potential reward (making many new contacts and growing your business).
If you’re always taking small to moderate risks, you’re going to grow! But that doesn’t mean you should always play it safe.
Don’t confuse knowing your numbers and making informed choices with playing it safe.
Sometimes, you have to just take a risk and hope for the best. Investing in your business is the only way to move forward! Some of the best outcomes come from big, go big or go home risks.
Heck, my first business was started that way!
One day, I decided I was sick of working my cushy sales job, and quit. I didn’t even give two weeks notice. I was done. The next day, I started a photography business, because I was skilled with my camera, and it was something I could monetize. I enjoyed it as a hobby, but as a business? Not so much.
While my business was successful, it wasn’t something I was passionate about, which led me down a path that would turn into creating this business, and I cannot believe how happy I am.
Not only do I love what I do every single day, but I have the financial freedom I need to be able to take care of my family and live the life I love.
Bottom line- you have to spend money if you want to make money.
I regularly invest in courses, read new business books, and consult professionals to help me keep my business on track.
When you stop learning, you don’t grow, and if you’re not growing, well, your business is doomed.
Next time, I’ll share my favorite tip for increasing your cash flow, and who doesn’t want some extra money in their pocket (or, hanging in their closet, as Carrie Bradshaw would say!)?
Do you struggle with knowing when to take a risk, and when to play it safe? Does investing in your business stress you out? Leave a comment or drop me a line here and tell me all about it!
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