My dad has a tradition of giving the grandkids $20 in quarters for their birthdays. Last year, my son marched his literal money bags to the store on the day after his birthday and bought three Transformers Rescue Bots.
The next day, he realized there was another Rescue Bot he could have purchased. Forlornly, he said, “Mom, I blew all my money. Now what do I do?”
But in the months since, those Rescue Bots have had countless hours of play. He even fashioned them into a megabot mech using rubber bands.
Jake thought he blew his big cash infusion. I think he made an investment.
As we watch cash go out the door, we question whether we’re blowing our money. When considering expenses, the key is to balance spending and investing.
When you invest, two things happen:
- You are intentional
- You’re taking some amount of risk for a potential reward
All operating costs are not created equal. Some of them help us grow, others are simply required.
When you spend intentionally on marketing programs, improving your systems, expanding your leads or sales potential, getting new skills, that’s investing.
When you spend without intention or because you feel you have to, that’s spending.
For your business to grow, you’ll need to make thoughtful, intentional investments of time and money.
Right now, it’s tempting to look at the money we have as a number of months of spending coverage (sometimes called burn or runway.) It feels safe to have more months of spending available. But what happens when you get to the end of that coverage?
When we get a cash infusion, it’s important to make investments quickly so they have time to pay off. For example, if you’ve taken an EIDL loan, don’t sit on 100% of the funds to cover expenses. In the next six weeks, invest some portion toward a short-term growth goal, something that can pay off by December. You might consider:
- adding core / evergreen inventory,
- buying ads or sponsorships,
- hiring a consultant or temp employee for a short-term project,
- upgrading your lead generation programs, or
- investing in a coach or course.
In this moment, I encourage you to consider where you can invest to extend your runway. You know it’s investing because it feels a little bit scary and uncertain.
Finding low- to moderate risk, high-reward investment opportunities will make your business more financially sustainable.
If you’d like to be more intentional in developing your business, join the waitlist for our next cohort of CEO Confidence.