Why you Need to Invest in your Own Company
After all the sweat, blood, and tears you’ve poured into your business, you’ve just received your first substantial paycheck. Time to treat yourself with that new bag you’ve been eyeing or eat at that fancy restaurant trending on your Instagram!
But as any good financial advisor would tell you, save the majority of that paycheck (after you pay your bills, rent, and necessities of course) to reinvest in your business.
First of all, the fact that you even got a paycheck in the first place is a promising sign that your company may experience potential and growth. Secondly, investors like to see that you are continually putting money where your mouth is. Investing in your own company will help pay off in the long run if you’re smart about where your money is going:
Diversify the Value of Your Company
If your company is in its nascent stages and haven’t scaled yet, chances are you still retain a lot of control over how your business is structured and how it is operated. Your investments don’t just have to take form in the shape of payments to your vendors and suppliers.
Instead, consider spending on marketing and promotions to give your company more pizzazz and brand awareness.
Once your company is further along the growth stage and you’re ready to talk equity, make sure that you’re wisely managing your investments in terms of assets. The more funding you receive from investors, the more people you need to fight in order to retain your position as majority stakeholder. Be wary of selling too many shares just to cash out.
Slow and Steady Wins the Race
As with any good investment portfolio, you don’t want to randomly dump a chunk of change into your company since it makes it harder for you to plan ahead. Instead, commit to a regular investing schedule where you consistently invest your funds back into your business.
This demonstrates to potential investors that you are strategically committed to ensuring that your business will have enough funds to survive. Plus, it serves as a financial boon to you by encouraging habits of living within your means.
Calculated Risks, High Payoffs
Don’t get fazed if you hit a snag down the road. Markets have always operated by boom-and-bust cycles, and the ones who tend to benefit the most from a bust are those who didn’t freak out about the immediate aftermath.
By sticking to your guns and playing slow and steady, you will be able to weather the lows in order to reach the highs. This comes in the form of higher valuation for your company, which ultimately means more profit for you in terms of equity, salary, and sheer profit.