Ten Secrets to Small Business Success – Invest in and Expand Your Business Cautiously

There are many steps one must take to be a successful small business owner or entrepreneur. One of those steps is successfully investing the money you make as a business owner. As your business grows you will find new opportunities and new ways to invest the profits from your business. You’ll be tempted to look at finances differently than you did when you first started as your business continues to provide positive cash flow. Now is the time to use professionals to help you with your financial goals.Most entrepreneurs and small business owners love change. It’s a part of their DNA and it’s a large part of why people go into business in the first place. We like to see the fruits of our efforts and that requires that things are in a constant state of change. And while this is good, a constant need for change can quickly lead to diversification. This can be a slippery slope.As you grow your business you’ll undoubtedly find opportunities to diversify. Perhaps you’re in the dry cleaning business and since you have access to a large group of people you might consider opening a house cleaning or lawn maintenance service. Resist the temptation. Rarely do small businesses successfully make the leap from one industry to another. Don’t risk your satisfied customers in an industry that you have grown to understand by delving into an industry that you don’t understand.Many years ago I owned a retail store cleaning business. My customers appreciated our work and paid us well. As they grew to trust our company, they began to ask us to do ancillary work at their facilities. We cleaned floors well, but our floor cleaning staff never made the leap to cleaning rest rooms. Frustrated, we invested thousands of dollars in special machines to clean the rest rooms. Our technicians never used the machines and we eventually lost the contract due to our poor rest room cleaning.The company that took over the contract cleaned rest rooms by hand. They were rest room cleaning specialists. They understood how to clean rest rooms and therefore they didn’t invest in fancy machinery that would never be used. We would have been much better off if we had contracted that service to a rest room cleaning specialist. We invested over $20,000.00 in special equipment that was never used. Worse still, most of the equipment was lost when we lost the contract. Now I can only imagine how much more money I would have if I had resisted investing in a service I didn’t understand and used those same dollars to invest outside my company in an investment vehicle. You should learn from my mistake. Your best bet is to subscribe to the “pay me first” mentality and invest the money that you’d risk in a new business venture in a vehicle that is designed for that purpose.Most small business owners pour everything they have back into the business. Don’t make that mistake. Pay yourself at least ten percent of all revenue in the beginning and use a portion of this money for investment. Consult your CPA or a licensed financial professional for advice on how to invest your money in a way that suits your risk tolerance. Since you’ve been successful in business, you may begin to believe you will be successful investing as well. Leave it to the professionals. Once you have both your personal and professional financial house and future in order, consider acquiring a best in class business that would be complimentary to your business if you wish to diversify.For example, a landscaper who specializes in high-end residential might consider acquiring a best in class pool service or installation company. Never risk the successful business you have for one you know little about. Do your research.