If you have recently come upon additional capital or funding for your new business – congratulations!
The next step is to make sure that you’re spending the money wisely to take your business to the next level.
You may feel like a kid in a candy store with so many opportunities and every vendor saying that their products or services are the best things since sliced bread. How can you make sure you’re spending the money strategically to maximize growth?
Here are some key areas in which you should focus your efforts and invest your capital:
1. Hire the Essential Roles
Having the right people in your team will allow you access to the essential skills and expertise required to take your business to the next level. These roles include: a CFO or accountant, a legal counsel, an IT support professional, a branding/marketing service, and a customer support specialist.
You don’t have to hire a full-time team right out of the gate. You can outsource these functions to ensure that the various aspects are covered without the price tag and administrative burden associated with hiring full-time employees.
If you have full-time employees, you should invest in their benefits packages, training, and continuous education. This will help you attract and retain the best talents and increase employee loyalty to boost productivity while lowering the costs associated with hiring and firing.
2. Implement the Right Technologies
Digital transformation isn’t just for large corporations. Businesses of any size can take advantage of the many affordable technologies available today to help them improve efficiency, reduce operating costs, and increase revenues.
Depending on your business structure and immediate needs, some key tools that can yield high ROI include business process automation and robotic process automation software, a CRM or email marketing platform, business SMS software, a finance/accounting application, and an eCommerce platform.
3. Invest in Marketing
If you want to grow your business, you need to find more clients or customers by investing in sales and marketing. This will allow you to reach more prospects, nurture leads, and turn them into sales.
It’s often worth outsourcing marketing to an agency or a specialist. There are many moving pieces in the discipline and you’d lose precious time and money if you were fumbling around in the dark. Also, invest in tracking and analytics tools so you can find out what works and fine-tune your strategies to increase ROI.
4. Improve Customer Retention
Many startups and new businesses make the mistake of chasing after new leads and leaving their existing customers in the cold.
However, since it costs 5 times less to retain a customer than to acquire a new one and an existing customer has a much higher chance of converting, you can’t afford to ignore cultivating customer loyalty.
An outstanding customer experience (CX) is key to boosting engagement, improving customer satisfaction, reducing churn, and increasing repeat purchases. As such, you need to hire a great customer service team and invest in the right monitoring and coaching tools to ensure that your reps are delivering the best CX to increase customer retention.
5. Build Strategic Alliances
Cross-promotions and strategic partnerships allow you to join forces with other businesses that share your target audience but aren’t direct competitors. You can increase visibility and focus your marketing budget on reaching an audience that’s most likely to convert.
Invest in networking with the right potential allies and/or creating a partnership program that will allow you and your partners to leverage each other’s strengths and resources to supercharge your growth.
6. Create a Cash Buffer
There are a lot of variables when you’re growing your business. A deal may fall through, a product may take longer than expected to launch, or a marketing initiative may require more time to yield the projected sales.
To avoid getting into a bind or jeopardizing your business, set aside a safety net of funds so you can have the liquidity available when you need it. The size of this cash cushion depends on a lot of factors, such as the volatility of your business. Go through your essential spending and make sure you’re putting aside enough money to sustain a few months of operation.
To identify the key areas in which to invest your capital, conduct a thorough assessment of your company’s growth potential, opportunities, and risks.
For most startups and new businesses, it’s important to focus on generating new businesses, retaining existing customers, improving cost-efficiency, and minimizing overhead. This will allow you to increase revenue and lower cost, which translates into higher profits and better cash flow.
When profits and cash flow become more predictable, you can then reinvest in the many key areas to further accelerate the growth of your business.