How to analyse where to invest?
In all honesty, you won’t know the best areas to reinvest in until you begin, and then analyse the results. There’s no one size fits all when it comes to the perfect reinvestment recipe. All businesses are different and what might prove lucrative for some, might flop for others. Keep testing and analysing the results against your business goals. Don’t be too hasty － do your research, give trials time to bed in and allow time for reinvestments to prove their worth before assessing any success.
Step 1: Understand your business goals
The best starting point. Take a step back and reflect on your business goals for the next 1-3 years. You need to have clear goals in place before analysing areas for reinvestment. For example, do you want to:
- Increase revenue?
- Expand your team?
- Launch a new service or product?
- Improve in-house skills?
- Invest in new equipment, new technology?
- Utilise business data more effectively to steer strategy?
- Streamline processes to inject efficiencies, saving time and money?
- Increase brand awareness and loyalty amongst your target market?
- A mix of the above?
Step 2: What needs to change?
With business goals in place, assess what changes need to be made to meet them, for example:
- Not enough clients/orders
- Too many tasks, not enough time
- Tasks are taking too long and involving too many people
- Poor communication between staff/clients
- Brand unknown
- Lack of clarity around target market/marketing strategy
- Services/products could be improved
- Concerns around security and compliance e.g. client data storage
Step 3: Make an investment list
Now you’ve worked out what needs changing to meet your goals, research solutions for each area, including approximate costs.
For example, Customer Relationship Management (CRM) software solves a number of business pain points such as improving communication and clarity across teams and with clients. It helps to streamline processes to increase efficiency, while offering a platform to better view and analyse data. If these are some of your pain points, research how much it would cost to enable a CRM across your business and the associated timescales.
Top tip: Keep your long term strategy in mind too – areas that might not be a frustration right now, might become one. Ensure solutions you reinvest in have the ability to grow with your business. For example, CRMs have features that make your sales pipeline more transparent across the business, have in-built social media scheduling tools – all great features for when your team and client base expand as your company grows.
Step 4: Make a timeline
Refine your investment list by placing tasks in order of urgency, with the understanding that some might need to occur before others can. Be realistic with timings – give wriggle room for research, testing and analysis as part of the reinvestment process.
Step 5: Profit allocation table
Transfer into a profit allocation table. Outline what, when (e.g. in the next 6 months?), the total cost of the investment and whether it’s an ongoing cost that is covered in monthly payments, or a one-off cost that is paid in one go.
Step 6: Don’t forget to keep ROI in mind
Keep return on investment at the forefront of all activity. Consider how long it will take to see results. For example, if you have a limited budget and are trying to increase brand awareness / revenue, consider starting with social media and Pay Per Click (PPC) advertising to gain instant exposure, before investing in longer term SEO strategies that take time to build.