3 Ways to Invest Cash Flow to Secure Winning Results

It all started with a used, $25 pinball machine. The buyers, two high school students, installed the machine in a local barbershop, where it proved popular with customers. They reinvested their newfound cash flow into seven more machines, which they placed in seven different shops. When those proved successful, the pair sold the business and (again) reinvested the cash in a new venture.

Cash Flow
Photo Credit: RomoloTavani

One of the aforementioned high school students, Warren Edward Buffett, has a current net worth of more than $61 billion. It all started with that $25 pinball machine and reinvesting his profits in promising business ventures.  If he can do it, why can’t your company?
Let’s look at three ways to invest your cash flow and grow your business:

Create new or better products:

If you have spare cash flow to reinvest, you’re already doing something right. That does not, however, mean you should stop at the current iteration of your products. Spy on your customers. Read their reviews online, visit message boards, or even send out review forms asking for their opinions. Once you have some insight into your customers’ desires, invest in the next generation of your product.

You could also take another route: build an entirely new line of products. Perhaps you’ve spied a hole in an existing market, or have an idea to create something truly unique and innovative. These represent fantastic chances to grow your company.

An idea for startups: follow Atlassian’s example and allow your employees periods of paid time to innovate. It’s a relatively small investment, but it can lead to significant innovation — and it improves employee morale!

Attract new, highly-qualified team members:

After all, if you are creating new or better products, that may require hiring new people. Create a list of promising targets and reach out to them in ways that illustrate how much you want to work with them. As an example, Red5 Studios (a game development company) sent out personalized iPods to 100 desirable candidates. Ninety of those candidates responded to the tactic, and a handful actually joined the team. It was a sizable investment to reach a small crop of people, but it worked very well!

Recruiting those targets is only the first step. Now, pay them competitive salaries and keep them happy by providing a top-notch work environment (which may also involve some investment). Your company is only as good as the employees driving it forward.

Expand your marketing efforts:

As the old adage goes, “You have to spend money to make money.” That’s especially true for marketing. A well-run marketing campaign can launch a previously-unknown company to stratospheric heights. Absolut Vodka, for instance, once accounted for about 1% of the vodka sold in the United States. At that point they chose to invest in marketing and they switched to their now-famous advertising campaigns, which are light on text (“Absolut _______”) and heavy on images. Absolut now accounts for half of all vodka sold in the United States.

Best of all, companies no longer have to run un-targeted ad campaigns. Now, they can use blogs and various social media outlets to really narrow in on their target demographic, and they can track specific results from those campaigns through such tools as Google Analytics. If something works, replicate it. If it doesn’t work, throw it out.

Investing in marketing is one of the safest ways to grow your business. If you haven’t already, channel some of the excess cash flow into a well-planned marketing strategy. You won’t regret it.

As always, if we can help you with any of those, please let us know. If you haven’t already, visit our About Us page to learn more about how we can help you grow your business.