Launching and running a startup can be challenging, especially the financial side of things. A primary factor that contributes to the failure of many startups is poorly managed finances. Raising funds for a startup is already a significant obstacle to overcome, but what is even more critical is how those funds are used once obtained.
Ferrari Energy, founded by Adam Ferrari, is an oil and gas company that has survived its startup days and can attest to the importance of smart investments during the early business years and beyond. Below, the organization shares five wise ways to invest startup funds for success and higher profits.
1. Start Outsourcing
Entrepreneurs wear many hats when starting a business, which is why investing startup funds in outsourcing can allow a new business owner to free up time for critical development matters by delegating tasks to outside help. Depending on the type of business and level of development, startup founders can invest money in hiring an accountant or bookkeeper, virtual assistant, or digital marketing agency. You can even outsource the tasks you dislike the most. Outsourcing not only frees up a business owner’s time but also allows businesses to hire experts to complete temporary tasks fast and efficiently without having to train or hire internal employees.
2. Grow the Team
As a business develops, so will the need for help, and sometimes you can’t outsource everything. Whether you are starting as a one-person team, partnership, or small group, a great way to invest startup funds when the time is right is to grow your team. That might mean bringing a full-time bookkeeper on board and in-house if you wish your accountant was within closer reach or hiring a receptionist to greet those visiting the office, handle scheduling, phone calls, faxes, emails, and other office tasks.
3. Invest in a Business Mentor
For business owners who want a little guidance along the way as the business grows, putting funds towards a business consultant or seasoned entrepreneur in your industry is a great way to secure expertise in areas that lack. Business or career coaches can assist with critical areas like generating a business strategy, working with investors, and even lending a hand with any internal or external conflicts.
4. Diversify Slowly
Rather than jumping straight into 401k plans or other investments, start using startup funds to create a cash buffer. That means setting aside money and saving for problems that you could face. Yes, diversifying investments can generate higher returns. Still, it is critical during the early stages of a business to genuinely focus on successfully sprouting the company you planted by putting a portion of the profits back into the business.
5. Invest Back into the Business
Investing back into the business during its first years is, in many opinions, one of the best things you can do with startup funds. There are multiple ways to invest back into your company to advance towards higher profits by improving your business’s weaknesses, increasing the marketing budget and efforts, or investing in SEO to reach more people online. Aim to strengthen the company in areas such as brand awareness and development or lead generation. Whether your organization offers a product or service, both can be bettered or perfected with startup funds.