Most successful businesses have an operating plan based on solving a problem for a specific market by providing a product or service. Businesses fail for several reasons, but the main culprit is cash flow issues. The general problem is cash flow, but the solution lies in the specifics of what caused the cash flow problem.
A profit and loss (P&L) statement will give you a snapshot of where you’re lacking, but underlying areas within your business model may be leading to decreased profits and increased losses. If you want your business to grow and thrive, you will need to invest more money in the right areas to keep your foundation strong.
When you invest more in the parts of your business that help generate income, you will boost your profits. But ironically, the areas that need the most monetary attention are often the ones overlooked and underfunded. Almost half of all small businesses fail in five years or less because of issues like financing or poor market research. Here are four top areas to invest money into your business to see consistent growth and success.
Article Breakdown
Brand Image
A business’s brand is more important today than 20 years ago. Branding has always been essential in the entrepreneurial world, but social media has made a huge impact. Most millennials admit that brand image matters when choosing to do business with a company. People tend to pick products and services with brands that align with their morals and values.
Social media has made it much easier to share experiences and outcomes you have with a company with a large audience. Your business can benefit from this by ensuring a positive brand image is at the forefront of everything you market. You should allocate a portion of your operating budget to building your brand. Branding is not just a logo and tagline, but how your customers view your business.
You can spend time and money developing the perfect color scheme and graphics for your company, but effective branding is a continuous process. If you want a thriving business, you should invest in a brand consultant who can help you build a reliable brand image your customers can trust.
Marketing Strategy
It’s no surprise that marketing is essential when building and growing a business. More companies are taking advantage of all of the opportunities to market their products and services directly to their ideal customer. Social media has also helped in this area by providing an additional vehicle for marketing techniques and influencing. Most business plans include a marketing strategy, but like branding, it should be an evolving process as your business grows.
One of the most effective ways to attract, retain, and engage with customers is through digital marketing. There are so many ways to market your products and services online that you will lose money by not using them to your advantage.
Social media marketing, e-mail marketing, affiliate marketing, and content marketing are some ways to keep your brand front and center when your customers search for you online. Content marketing should be included in every marketing strategy, as most successful businesses have an online presence. Investing in a content strategist can help you effectively engage with your target market, generating more income for your business.
Accounting System
A P&L tells you the “what” of your business’s finances, but the accounting system you use will tell you the “why” so you can correct reporting errors and other areas of concern. The summary of your profits and losses says a lot about the state of your business. Good accounting and record-keeping are essential for businesses of any size. But fast-growing businesses have a greater need to establish a good accounting system and fixed asset management to ensure accurate balance sheets.
Depending on the size of the business, the accounting may be managed by a team or an outside company. You should invest in a robust accounting system and hire the right people who can keep up with the numbers as your business grows.
Customer Service
Branding and marketing will help you get in front of your target market, but good customer service keeps your customers coming back. The product or service you provide might be exactly what a customer needs, but if you offer bad service they will go elsewhere.
Most businesses try to compete with other companies based on price and selection. But if you invest in improving and maintaining excellent customer service, you will be ahead of the rest. Customers are generally more loyal when you serve them well.
Good customer service is lacking in many businesses today. You can take advantage of this by holding your company to a high standard for serving your customers and soliciting feedback to measure your progress. You can use customer satisfaction surveys to gather data and invest in an analyst who can determine what areas you should focus on to create favorable outcomes and happier customers.
Final Thoughts
Many businesses fail due to cash flow issues and financing, but the ones that provide solutions to problems using a solid business plan are the most successful. Putting money back into your business is a good way to help it survive, but allocating money to the right areas will help it thrive.
If you have a business you want to grow, you should invest more money in your brand image and marketing strategy. You should also use money to keep a good accounting system and to help maintain good customer service. All four of these areas can affect your P&L statement, but managing them correctly can ensure a big return on your investment.