But, leaving your company with very little money for the purpose of reinvestment can certainly make it more difficult for your business to develop and grow in the long run. Here are just some of the reasons as to why reinvesting 50% of what you earn back into your business is the best choice for those looking for significant development and growth.
Faster Business Growth
The more money you dedicate to investing in the company, the faster your business will be able to grow. Although increasing customers and demand are important for good rates of company growth, investment also plays a huge part – without money set aside for investing in growth and improvement, it would be impossible to physically grow in order to cater to the growth in demand. Investing heavily in growth sooner rather than later means that your business could be earning figures that you would never have imagined within the next few years. Other investments, for example outsourcing departments such as HR, finance collections and invoice factoring, or even customer services can all help your business to run smoothly and be in a better position for development and growth.
Grow Your Wages Faster
When you start your own business, the potential wage which you could be paying yourself is definitely one of the most attractive factors. However, what many business owners do not understand is that during the early days of the business at least, it’s impossible to pay themselves a wage which is more reflective of their long-term income goal whilst encouraging their business to grow and develop at the same time. Taking as high of a wage as possible during the first few years of a business means that there is less money left to invest in the company, leaving you earning the same amount for longer. On the other hand, saving 50% of your potential wage to invest in the company means a bigger chance of making higher profits, increasing both the amount that you pay yourself and the amount that you reinvest.
Saving 50% of your wage each month to reinvest into your business means that you have a way to learn what worked well and what didn’t without losing out on too much money or putting your business’ cash flow in jeopardy. Chances are, you will find out down the line that some investments were unnecessary, or you will discover that you have made the wrong decisions when making certain investments. Making reinvestment into the company something that you do on a regular basis rather than making large, one-off investments every so often means that you will be in with a better chance of learning what works well and what does not. Reinvesting in your business means that you need to be prepared for the fact that sometimes you might make mistakes.
Running a business takes a lot of time and effort, and in many cases, there is no way that one person could do all that is required to run a business, completely on their own. For entrepreneurs who have big dreams for growth and development in the future, hiring others to help and outsourcing some departments is absolutely essential in order to see this future growth come into fruition. In order to take your business to the next level, chances are you will need to hire employees, contractors, freelancers, or other companies who you will outsource work to. The key to good business growth from reinvestment is to figure out what it is that are good at, and stick to that whilst outsourcing all the other pieces to people who are likely to do a better job.
As a business owner, putting your hard-earned dollars back into the company every month whilst keeping just a small amount for yourself can sometimes be difficult. However, in the long run, reinvesting half of your earnings back into your business can mean great results, faster growth and development, the chance to hire employees and outsource work sooner, and a faster rate of growth for your wage. Reinvesting in the early days means that you can reach your business goals sooner.