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Why Businesses Have To Spend Money To Make Money

Estimated reading time: 2 mins

Modern companies want to cut costs as much as possible for obvious reasons. When a business keeps the expenses low, there is a better chance of success. However, reducing expenditures doesn’t mean the firm cannot get by without spending. To grow and expand, a business has to spend money to make it back. Otherwise, the shutters will come down and shut the premises forever. If you’re an owner who is financially thrifty, below are four reasons why it’s a bad idea.

Investments Are Long-Term

Organisations have a mentality in which they want to spend money but see an instant return on the investment. Sadly, not every venture works out this way because projects need time to mature. Take the company’s reputation as an example. Without a stellar standing in the community, customers aren’t going flock to the store. Yes, you can invest in a logo and modern marketing methods, but they may take a while to bear fruit. Does this mean it’s a bad investment? No, it just means you have to be patient. In many cases, patience is the key to turning over money and staying out of the red.

Keeping Up With The Joneses

The success of the firm isn’t solely down to you or the employees. Bosses don’t like it, but companies are at the mercy of their rivals. In simple terms, it’s imperative to mirror their actions in case they steal a march. Technology is the easiest way to see this to be true. Tech can revolutionise business processes and increase output while increasing efficiency. These are traits with can transform a company, and you don’t want to miss out. A frugal boss who can’t pull the trigger runs the risk of letting their competitors drive off into the distance.

Pay For Professionals

It is never easy to see why people like lawyers and bookkeepers are necessary until they work for the firm. Their skill set often goes under the radar because the results are hard to see. But, they are easy to track. An accountant can make significant tax cuts, but he/she can also hold money back. It’s a simple trick, but keeping cash flow in the bank can save a business a fortune. Plus, finance experts organise payments to avoid late fees. Of course, the industry is a capitalistic one and they don’t work for free. If the business wants their help, they need paying.

Saving Isn’t Savvy

Sometimes, keeping money in reserve is helpful, as an accountant can attest. But, the best way to make money is to invest in a commodity and watch the value grow. Stockpiling cash in a savings account is a sure-fire way of maintaining the business’s resources. However, the rate is so low that it will take years to accrue a decent amount of interest. The best option is to spend the money and invest it in suitable stock options to get a healthy return on investment.

It’s a fact that companies have to cut costs to survive. But, you shouldn’t take it to mean spending money is a sin. It isn’t wrong, but a savvy way to make money.

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About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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