In the final episode of The Prosper Collective Podcast for Season One, I am going to talk about how you know when to invest in something. I’ll give you a couple of questions you can ask yourself or things that you should be doing.
I also talk about the order of investment and how you can actually make your money back on your investment.
INVESTING AS IT RELATES TO A BUSINESS OWNER
When talking about investing, I am talking about whether you need to buy an asset, a building, or spend money on personal development.
Oftentimes, courses or those sorts of things can have a hefty price tag and it’s important to figure out whether or not they are something within your price range, and whether you can afford them.
Another thing would be a mastermind, society membership, or higher-level coaching.
It can also be that you’re looking for a business coach or you want to invest in some help like a VA (virtual assistant), Director of Operations, or a copywriter.
This is what I mean when I’m talking about investing. It is not the traditional personal sense of investing where you’re buying stocks and bonds or you’re buying rental property.
My emphasis is on how you know when it strategically and financially is the right time to spend money on something more than just Post Its and pens. This is probably going to cost more than your make in a month or pay yourself. It can also be beyond the cost of the normal expenses in your business.
Investing in yourself or business is super important because that’s how we uplevel as well as add more value to what we do.
With the right investment, we can command a higher price for what we are selling and this can enable us to move forward in business.
So how do we know we are ready to invest? These questions will help guide you towards making the right steps.
ARE YOUR FINANCES READY?
First, you should assess if your finances are ready for a particular investment, and for that to happen, consistent income should be top of your list.
I tend to notice that a lot of people invest in coaching or masterminds or group programs before they have consistent income and from a financial standpoint, that’s really not a healthy way to start your business.
You’re starting it in the rears if you don’t have enough money saved, or you don’t have enough money coming in consistently in your business.
ARE YOUR EXPENSES COVERED?
The second thing to figure out whether your finances are ready, is are your expenses covered.
Can you pay all of your expenses every month? If you’re not able to pay your regular monthly commitments, it’s not the time to invest, you need to work on getting some more income through the door so that all of your expenses are covered.
PAYING YOURSELF
Are you paying yourself?
Oftentimes, we as business owners want to take shortcuts and run the business as bare bones so we can buy a particular shiny thing, get into the next cool program, take the next course or hire a VA just like everyone else is doing yet, you are not paying yourself.
In such a scenario, I would say not all of your expenses are covered. I have talked about paying yourself in my previous episodes and I would encourage you to get as absolutely close to your livable wages as possible. You really want to be making sure that your personal expenses are catered for.
ARE YOU SAVING FOR TAXES?
These questions are in chronological order. So if you can’t answer yes, to one through three, then it really doesn’t matter if you’re saving for taxes, because you need to have consistent income and your expenses need to be covered.
If you’re not saving for your taxes, then you have no business, investing further into something.
DO YOU HAVE A SAVINGS ACCOUNT?
Do you have a savings account that has at least two months worth of your business expenses?
I’d love to see you at three, or four, or maybe even six, but I’m just gonna say one to two months of business expenses. The reason I say this is because if you know, if the crap hits the fan, and you need some time to either recover some income or what not, usually, we can make a pretty good turnaround in two months.
If you feel like it’s gonna take you a longer time than that to recover your income, then maybe you’re gonna want something more like three to six months. This will be of value in case we lose a client or that big project doesn’t come through.
So when you’re talking about thinking about investing, really need to make sure that you have a safety net in case something goes awry, or something goes not quite as planned.
DO YOU HAVE THREE MONTHS OF THE INVESTMENT SAVED?
Oftentimes, when I’m talking about this, what I mean is we pay for something that has a twelve-month commitment, or a three-month commitment, or a six-month commitment, or it’s ongoing, you’re paying something monthly, like a business coach, or a mastermind program.
While you sign up for such commitments, it’s important to ask yourself if you have three months of that investment already saved.
Another example would be you looking to hire someone, do you have three months’ worth of their salary or their contractor payment in the bank in a savings account? This is just a great way to make sure that you are ready for anything that is unexpected coming up.
Now, if we’re talking about something that’s one lump sum, obviously, we need you to have that money in the bank before you’re paying it.
THE ORDER OF HOW WE ARE INVESTING
Now that we are clear on your finances, we need to get down to the order of investment.
Should you hire a VA first or am I going to do a program or should I buy this really expensive project management system or customer relationship management system?
How do I know what to invest in? First, second, and then third, and so on.
.First thing that I think you should invest in is your viable signature offer.
When we’re starting our business, we have a signature offer or our main flagship thing that we’re offering. We want to get that to a viable place where we are consistently selling, fulfilling orders, building a good track record of this offer, and filling a hole in the industry.
This will help you overcome those first few months of selling this product, where you’re really unsure of what you’re doing because you have a system and it works well.
So if someone knocked on your door tomorrow and said, I want to slap down this amount of money for your viable signature offer, you have no hesitancies, you’re ready to sell you’re ready to go.
You can then invest in a course or program to make your offer credible.
PEOPLE
The second thing you’re going to invest in is people and we’re looking for people who are smarter than us.
As a solopreneur, I have invested in contractors, and people that can do things for me that I need. I am not a techy person so I have no clue about websites and I paid someone to help me get my podcast page up as well as someone to help me with the podcast tasks like editing, show notes, social posts, and blog posts.
I invest in those people because I am looking for people with value systems that complement my value system and can get behind the vision and mission of my business.
SYSTEMS
All right so contrary to popular belief, the last one is actually systems.
Now, there’s a little bit of a caveat here. I’m not saying don’t go out and purchase monday.com for you whatever amount it is now.
What I’m referring to is those bigger all-in-one systems that are going to really help you run your business.
And the reason systems come after people is because as an entrepreneur, you may not know all the ins and outs of your business however the people you have hired can always suggest particular systems to help make work seamless.
For instance, I do not know everything about my website nor do I really know how to upload an episode the way my podcast manager does. It is with their expertise that I can figure out how what systems work for my business.
Now, you may never get to the point where you need those big systems but when we’re really scaling our business, it’s highly possible that you could get to the point where you need something more cohesive or comprehensive, that’s going to cover a lot of bases in one system.
So again, you’re going to get that viable, signature up a viable signature offer up off the ground and running well, you’re going to invest in some really smart people, and then you’re going to invest in systems.
HOW TO GET YOUR RETURN ON INVESTMENT
MAKING YOUR MONEY BACK
We want to be thinking about this while looking at programs or business coaches to invest in. Personally, when I was looking at Natalie Gingrich’s Director of Operations Program, one of the things that really stood out to me was I could make my money back after the first or second week of the program.
We were taught something within those first couple of weeks, that really was a seller, and I could go out and make the money back before the program ended.
So when we’re talking about return on investment, the first thing we want to know is can we make our money back? And that’s a great question to ask a course creator or a mastermind, it shouldn’t be something that you have to dig to find, if so that that could be a red flag that this may not be a great investment.
TIME
Time is another thing to consider and in this case, I am talking about hiring people, oftentimes, we can make money back on some people who work in our business, but for the most part, we’re probably going to get a return on investment in time.
Personally, if I spent time doing all of my podcast management, it would take me certain hours per week so the amount of money I pay on a weekly basis to get this podcast out there is worth my time because I can use that time to invest in my business.
ADDING VALUE TO YOUR OFFER
When I was looking at the Director of Operations Program, I was really thinking about how can I add value to my offer.
I have to say that that has really paid for itself a hundredfold. It’s paid for itself because I was able to uplevel my viable signature offer and make more money.
It gave me a framework or a skeleton to build my offer on and it really helped me figure out how to efficiently work that out in people’s businesses and get more money. So if this investment that you’re looking at adds value to your offer, allows you to command a higher price, or makes you an authority in the industry, you might be able to get other ROI off it.
EFFICIENCY AND SYSTEMS
If you’re looking at investing in something that’s going to streamline you or make things less clunky in your business, then you should consider systems because they will save you money and time in the future.
With the right systems, you are going to add value to your offer, because you’re going to be able to deliver in a more streamlined and cohesive way.
Therefore efficiency and systems are not something to overlook however they may take you a little bit longer to actually realize your money back on that investment.
THOUGHT LEADER
Your investment could put you in the place of being a thought leader in your industry, perhaps being a part of a mastermind. This may create other opportunities for you in the future however it is not as concrete as it sounds because it requires you to be a little bit savvier to identify your zone of genius.
PEACE OF MIND
The last one is peace of mind and honestly, when you think about hiring people in your business, especially someone like a CFO or a bookkeeper or an operations person, peace of mind is huge.
With this the ROI, you can get is a load off your state of mind allowing you to be creative. This will have you think of new offers and be the visionary of your business.
When you’re looking at investments, I would encourage you to figure out if you can make your money back, how much time it offers you, the value it brings, how it will help you streamline things in your business, and if it’s going to create you as a thought leader or if it’s going to give you peace.
I hope this information is helpful to you as you figure out where you would love to invest to make your business scale with efficiency and get to a point of financial steadiness.
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