HR Matters

KATHARINE BOGARD Workplace Central (formerly Haycroft Workplace Solutions)

SPEND MONEY TO MAKE MONEY

The term ‘spending’ sounds scary to a business owner. Nevertheless, it is crucial companies stop thinking that spending money, means losing money. In fact, the concept ‘you must spend money to make money’ dates back to 255 BC. This idea is still relevant today; spending money is the only way you can grow a business. However, it doesn’t mean you should spend money absentmindedly. To ensure you are making the best decisions for your business, record where your money is being spent and the expenses, in dollars. Where your company may spend money: • Staff w ages • Resour ces, company knowledge and education of staff • Tools, such as sof tware • Mark eting/advertising • Training • Promotions/sales • Business location • Equipment Consider this e xpenditure in reference to how the business makes money; by compiling a second list. For example, the profits made by selling your product. It is important to remember, a specific monetary figure may not always be evident. In these cases, consider what the investment is worth to your business and attribute a proportionate value. This perceived value is liable to change over time and will likely align with a business goal. For example, it is difficult to measure greater brand awareness in dollars because it may increase consumer trust and lead to upselling opportunities with existing clients or referrals. This may be particularly valuable for some business models, but not others. Where your company may acquire money: • External financial investments • Profit/mar k-up on services/products • Broad client ele • Accessible specialist offering, like online services • Accurat e data retention • Shared expertise • Brand aw areness, to instill trust and gain future clients • Efficient service and/or q uality products By comparing these two lists you can measure your return on investment (ROI). The money you outlay should always correlate with the money you earn. If you are spending money, but not earning more in return, keep testing until you get a better result.

However, before eliminating an area of expenditure, such as advertising, contemplate where precisely the money has been spent. The particular advertising medium you used, may not have been suitable, but that doesn’t mean advertising is not a valid investment. For example, perhaps radio ads haven’t produced a great return on investment but advertising online may still be worthwhile..

Drawing these comparisons regularly will help determine if your money is being well spent and identify new opportunities for making money. For example, while you may not immediately see a return on your investment when spending money on new software, by investing in becoming more efficient, you will likely generate more revenue in the future.

ABOUT THE AUTHOR Katharine’s qualifications in graphic design, journalism, advertising and creative writing enable her to implement comprehensive marketing solutions for businesses nationally and globally. The support of Workplace Central’s professional team and flexible work arrangements, empower Katharine to focus on her health.