One of the best childhood lessons from old fables that still holds true is that ‘Money makes more money’ But in spite of this being an altruistic truth, entrepreneurs at times struggle to make the right business decision regarding investments and expenses. About where to put our money so that it grows further.
For a moment, go back in time to recall what was the first big investment you did in your business? How easy or scary it was? Do you still feel good about it or think it to be money wasted?
Whether it is investments, which we can understand as areas that may or may not generate revenue for you directly but they certainly help you either save time, increase skills, garner intangible benefits, make you future ready, enhance productivity or they are expenses which are business requirements that help you produce or process the products or services you deliver, entrepreneurs have to make a decision about putting the money in it or not, learning and considering many factors such as the payment management system. It’s important to carefully evaluate all aspects and gather relevant information before making a decision.
As a business owner, you are required to make decisions of every kind, every day. But sometimes we are influenced by certain factors which come in the way of decision making. These could be factors like uncertainty about the outcomes, lack of confidence, unavailability of resources, fear of success or failure, bad experience from the past and more such internal and external reasons. A good way to overcome these problems is to make use of these solutions:
1) Evaluate the impact: Identify the shift that the investment can bring for you, both in short and long term whether it is saving of time, more skills, increased productivity, better future, make money or something else. If the shift can create better results for you in other areas of your business you can consider the investment or expense to be a useful one.
2) Assess the risk: Count your risks and draw up a mitigation plan as well. Take stock of the factors that might influence the success of the investment and jot down the counters for them. For example, a female quits her corporate position to start her business. Being used to working with a team she now risks effectiveness and productivity at work when she has to work all one. She should certainly seek help with a friend who can be her accountability partner or coach who keeps a check on her progress.
3) Determine the worst-case scenario: Think about the maximum you might lose and answer for yourself if from that worst case you still will be able to build yourself up and are you willing to course-correct if things don’t work out the way you wanted.
4) Know your objectives: Ask yourself what are the key outcomes and results you are looking for, the baseline which if met you can say that the particular decision worked out well for you. Not everything in life is 100%. So take stock of what percentage of attainment will be a good outcome for you.
5) Learn more: Believe that you have every damn right to inquire and find out about each bit of information regarding that investment. Gather all the facts and features that you need to have to make an informed decision. Information is the only solution to uncertainty.
A solution for business challenges which very often entrepreneurs undertake is asking friends and family. While it is good practice for opinion formation or knowledge exchange, decision making is an individual exercise and is best done without the influence of people with half knowledge about the subject matter. Many times people ask too many people about the same challenge having too many viewpoints ending up with yet another problem of choosing the right solution. The best resolution for this is to always solicit advice from subject matter experts and experience holders.
So the next time you find yourself at crossroads of whether or not to make that investment or expense, weigh all the options and make an informed decision which gives you confidence, not jitters. And remember many a times it is not about whether or not you can afford it but more about how you make sure to reap the full benefits, look into what will it take to make this vision, this goal you have for your business a reality and if this particular purchase helps you do that, how can you make it happen.
About the Author:
Roshni Baronia, Founder RB Consulting
Roshni is a Go-Global Strategist and Influential Speaker helping women entrepreneurs build sustainable and global businesses. Her boutique firm RB Consulting serves women-led startups and small businesses with sales advisory and growth consultation through sales process optimization, strategic sales planning, sales coaching and SHEforce development – the all-women sales team. Roshni is a TEDx speaker and certified Strategic Sales Management expert who has authored the Ebook ‘How to Revolutionize your Sales Mindset’ and has also curated a ‘Know your Selling Style’ test exclusively for women entrepreneurs. Roshni is passionate about public speaking, mentoring and yoga.
Roshni facilitates decision making and the best way forward in their business for women entrepreneurs in her Bust Business Bottleneck program where she helps business owners navigate through imminent growth-related challenges