Reinvesting In Your Business With Your Earnings
We answered the questions. How Can You Reinvest Financially? How Can You Invest Your Time? How Can You Invest In Expertise And Experience? How Can You Find Out If You Need To Reinvest In Your Business?
Warren Buffett is one of the first names that comes to mind when it comes to investment. His investment career is full of success incomparable to anyone's. Buffett's initiative, which made one of its first investments by buying a pinball machine with a friend during his high school years and selling it to barbers, was successful. Buffett, who made use of the earnings he made from the pinpall machines that he sold for $ 25, by buying more pinpall machines, managed to sell 8 pinball machines.
He eventually sold this business he had set up, and with the earnings he bought stock and founded another company. By the time he was 26, he had $ 174,000. The current value of this money is close to 1.4 million dollars.
Undoubtedly one of the 20th century's most successful investors, Buffett understood the importance of "investing in your own business".
Investing in your own business is one of the best ways to make wealth. If you have a company, you must realize the importance of reinvesting in your company for this company to grow and be successful. You should not forget that investing is not necessarily related to money, and time and labor are also extremely important investment factors.
Of course, Warren Buffett's success today is not due to the few machines he sold during his high school years. He is a person who knows very well how to invest in the right business ideas and to make the most of his money.
If you use your time, knowledge and experience in a way that will gain your company in the long run, you will have made an important investment.
How Can You Reinvest Financially?
Financial reinvestment is the first thing that comes to mind when it comes to “reinvestment”. Transferring some of your company's profits back to the company as an investment is very important in terms of the growth of the company and its position in the long term.
The vast majority of startups should definitely take the issue of reinvesting more seriously. Because startups are not yet ready to compete with the big companies of the industry. For this reason, a serious "re-investment" policy and a growth move will be an extremely important strategy to gain a place in the sector and to compete with large companies.
The amount to be determined for reinvestment may also vary from company to company. The main issue in reinvesting is to have a certain strategy rather than the amount. In this context, it is of great importance to be strategic and re-invest in line with the company's growth plan and needs. Company expenses, employee salaries etc. It is most logical to invest some of the remaining earnings in the company after doing it.
If you are the boss of the company, you know the issues required for the development of the company and the budget you need. Things such as improving the company's infrastructure, increasing production tools, improving customer service, and renewing the marketing strategy increase the company's earnings and reduce costs. In this regard, you need to invest in consideration of the company's requirements.
In particular, the returns to reinvest in marketing will be high. So "You have to spend money to make money." is quite accurate at this point. It is important to act smart in marketing, to act correctly in marketing and advertising strategies, and to closely monitor how these campaigns contribute to the company. When making a marketing campaign, determine the results you expect, so you can analyze the success of the campaign. How many sales do you need to make? How many new customers do you need to get? How many TL do you need to sell for every 100 customers? Run a marketing campaign by statistically analyzing this information before the campaign.
Buying other companies is also a method of reinvestment. Procter & Gamble, for example, had great success when it bought Gilette because P&G and Gillette were prominent companies in different markets. So when the two companies merged, they operated in more areas together, and both P&G and Gilette were profitable. "Win-Win" situation briefly ...
In some cases, borrowing can also be helpful. Although it may seem unreasonable at first glance, when borrowed carefully, this can be an important factor for the company's growth.
Financial reinvestment, when implemented strategically, can bring huge benefits to your company in terms of long-term growth.
How Can You Invest Your Time?
"Do your best, let other companies do the rest." - Peter Drucker
Time is cash. Don't underestimate the value of time. Spending a small portion of your earnings to save time will create great opportunities for you. Transferring some internal tasks to other companies and individuals, in other words, hiring a "subcontractor" will save you valuable time. During this time, you may be interested in your bigger goals.
The time you save will be very useful for growing your company, increasing sales and dealing with your future plans.
It is necessary to follow a certain strategy while outsourcing some of your company's work to other people or companies. So when employing subcontractors it is necessary to see this as part of the growth plan. You should put a value on your time and not pay more than this value to the person who will do your work.
Of course, it is also an important investment method for the company to increase creativity and efficiency by increasing savings and reducing expense items, especially in the early stages of the company.
It is also a very smart method to spend time building environment. One of the most important investments you will make in your career will be meeting new people and strengthening your existing relationships. To gain new customers, you must take the time to develop your relationships with your existing customers. Networking enables you to establish very important business contacts, gain new customers, increase sales and act as a powerful marketing tool.
How Can You Invest In Expertise And Experience?
How you put your strategy, skills and experience into action is one of the most important factors determining the success of the investment.
The investment should be made carefully and within a certain plan. The main purpose of the investment is to move your business forward and to gain more profit in the long run.
Education, for example, is a very good investment. Training yourself and your employees and organizing in-house training courses will greatly benefit the company in the medium term. Some companies have “apprenticeship programs”, some companies pay for seminars and courses attended by their employees. In doing so, a contract is signed with the employee and the employee is prevented from leaving the company for a certain period of time and working for a competitor. A well-trained staff is a valuable asset to your company. Companies that are aware of this also invest in the training and skills of their employees.
It is necessary to be in contact with experienced and knowledgeable people and to benefit from their vast experience. People like business coach, mentor are there for this. There is a certain cost to have a mentor, but the knowledge, experience, and foresight of that person can provide invaluable advantages for your company's future. If you get support from a professional and experienced person, you can put your company ahead of your competitors.
How will you decide which type of investment will make the most financial sense? This is also an important question. It is possible to decide this by looking at the potential opportunities, looking at the pros and cons of each investment method, and doing risk management.
You might think like this: It might be a good idea to refresh your website, but a revamped website may not guarantee increasing your sales in the next month. At this point, you can examine the situation in other companies. So, for example, in which areas did the rival company invest and what results did these investments have? It would be good to do this kind of research.
Once you have decided on an investment strategy that will maximize your earnings, you need to have a plan to observe the returns of that strategy. Your reinvestment strategy is essential in making sure that you are making the most of your money and showing that investments are being made as efficiently as you envisioned.
Finally, keep this in mind: Don't give up long-term investments for short-term gains. There is nothing worse in business than not being able to take advantage of great opportunities because of impatience.
How Can You Find Out If You Need To Reinvest In Your Business?
Successful entrepreneurs, from Bill Gates to Warren Buffett, from Henry Ford to Mark Zuckerberg, have all made huge fortunes by investing correctly. These people became number one in their field by reinvesting the profits of their companies and developing strategies to grow their companies. In this respect, reinvestment is a situation that should not be overlooked in terms of ensuring the continuity of growth of a company.
Many entrepreneurs view reinvestment as "wasting money", which points to a highly pathological mentality. Investing does not mean unnecessary expenditure, but channeling resources to gain more profit in line with a certain strategy. In the long run, this is essential for the growth of the company, increase in earnings and for the company to become a bigger player in the sector.
If you do not want to grow your company or increase your profit margin, you can ignore the "reinvestment" option. However, this will be fatal for your company.
If you want to take your business and your earnings to a higher level, invest in your company and you will see great benefits in the medium and long term.
Failure to Reinvest May Lead to Bankruptcy
I bought many companies during my career. Words are not enough to describe how "wasteful" the CEOs of these companies are.
Astronomical salary CEOs, luxury office cars, villas, luxury vacations… All this means wasting the capital that can be spent to grow the company for luxury.
Of course, these CEOs could not fully perceive why their company went bankrupt. I knew the reason behind the bankruptcy.
The first company generated a revenue of 5 million TL in 1995. My CEO salary at that time was 150,000 lira per year. I was paying a home loan, I had a family to support. My other entrepreneur friends were supposed to "live their lives" with the money they earned. But eventually they too went bankrupt. I was trying to invest in my company. Eventually I managed to sell 50% of the company for 9 times the earnings at the time.
What I mean is this: One of the hardest things about entrepreneurship to understand is realizing the importance of reinvesting. Fortunately, I noticed this fact quite early.
Put your earnings back into your business for a long time
No matter how profitable your business is, you can only survive as long as you care about savings and investment.
In other words, "Don't try to be king just because some money is in your pocket."
One of the things that distinguishes us from other companies is that we have acquired other companies. Largely we bought smaller companies than ourselves. The funny thing is that although these companies earned less than us, their CEO's salary was almost 10 times higher than mine.
After I took the company public in 1997, I decided to buy a company worth 25 million. The annual salary of the founding partners of this company was 600,000 lira. Each of them was paid 600,000 lira per year. And of course they had no idea why their company could not grow.
Their bad habit was in my favor.
Even after I bought the 25 million dollar company, my annual salary remained stable at 150,000 lira. After purchasing this company, the company's founding partners wanted to work for us, but this system did not work.
Because they did not like the salary I gave, they did not find it sufficient.
In my current company, we transfer most of the earnings to investment for the company in line with the growth plan. A company can only grow like this.
Don't Ignore Long Term Success For Short Term Success
You know young entrepreneurs who take pictures with their latest model cars on Instagram… They invest their earnings in luxury and luxury. However, if they knew a little bit of work, they would not act as wasteful. If they invest the money they earn in their business, they can earn more in the long run.
When it comes to entrepreneurship, there is a saying: “Entrepreneurship is living life like nobody dares to live for a few years. In this way, you can live the rest of your life in a way that no one else can. "
This is very true. An entrepreneur is a person who knows how to sacrifice when necessary. But it's not just about sacrifice. To know modesty, thrift; Keeping money in the company is also one of the issues that an entrepreneur should know. In other words, it is necessary not to get off your feet without seeing the stream, so to speak.
The bottom line is that to become an important company in the industry, you need to retain your earnings within the company. Even if your salary as a boss is 50,000 lira per month, if you cannot manage your company's earnings properly, the good days will run out in a short time.
In this respect, while your competitors live in luxury and go bankrupt in a short time, if you spend your money to invest in your company, one day your company will grow more than anyone can imagine, and of course the earnings will increase at the same rate.
In summary, it focuses on your work, rather than racing to show off with others; If you make the right moves to grow your business, you will have a firm standing even 30-40 years from now.
Entrepreneurship is also such a thing.