Any business owner knows that reinvesting in their company is key to success, but how much of your profits should you be investing, and what strategies should you adopt? It can be hard to strike a balance when it comes to reinvesting or keeping the profits of your hard work, but the real trick is knowing what to invest in. Read on to learn about how to manage this part of being a business owner with ease.
When to Reinvest in Your Business
When your business first starts raking in profits, it can be tempting to take that money and use it to improve your own quality of life‚Äîespecially if you’ve made sacrifices to get to this point. Before you buy that new house, you should think about reinvesting in your business first. Even if it’s doing better than ever, there’s always room for improvement. If there’s an opportunity for growth, whether that’s opening a new location or expanding your product catalog, you need to take it! The payoff will be well worth it down the road.
When it comes to how much of your profits to reinvest, traditional wisdom puts the number at about 30 percent, though some say 50 percent is the better figure. The actual percentage of profits you should reinvest depends on your growth strategy and business goals. It may take a few more sacrifices to get where you want to be. You know your business and its vision better than anyone, so choosing how much to reinvest and how really depends on you. However, these three reinvestment strategies can be applied successfully in any business.
1. Embrace digital assistance.
Digital transformation isn’t really an option anymore if you want your business to stay viable in the years to come. Embracing technology in every aspect of planning, strategy, and operations will not only help you boost productivity and revenue, but it’s just necessary to survive in this new era of information.
If you aren’t leveraging your company’s data, you’re going to lose your competitive edge ‚Äî¬†plain and simple. Today’s data management and analytics software can carry out data mining, cleaning, consolidation, analysis, and visualization without needing a dedicated data scientist on your team. Data analysis can help you improve operations efficiency, find new customers, create personalized marketing campaigns, and make faster, more informed decisions in general.
It’s not just the data, either. New technologies like the Internet of Things are revolutionizing how we carry out business operations as well. Everything is becoming increasingly connected and digitized, which makes our lives a lot easier. For example, many businesses and residential companies are using smart technology like ButterflyMX to increase their security. ButterflyMX designs video intercom systems that property managers and tenants can use to simplify building access and prevent unauthorized access.
The economical cost of traditional intercom systems isn’t usually worth the investment, but the systems at ButterflyMX.com are completely wireless and don’t require in-unit hardware for each tenant. With a quick, easy installation and powerful integrations, property managers can manage tenants, packages, visitors, and more from one system. It’s convenient for everyone. In fact,¬†tenants can use a virtual key or login to gain access and connect to the video intercom via their smartphone. Not only will property owners save money on installation costs, but they’ll increase tenant satisfaction and security, which will draw in more business.
2. Get smart about your equipment.
Smart factories and facilities are on the rise, with some experts suggesting that the future of manufacturing will be 100 percent automated. Artificial intelligence has come a long way since Siri was first unveiled, and today’s machines can not only think for themselves, but they can communicate with other machines too. This has the potential to transform manufacturing completely, and it is. Industry 4.0, or the Fourth Industrial Revolution, incorporates these smart technologies to build ultra-efficient factories of the future.
One of the best things about Industry 4.0 is that it’s scalable, so small operations can also benefit from these new technologies. Let’s say you own a small business that manufactures CBD oils and vape pens. You can invest in an automatic vape cartridge filling machine that has the ability to fill 12,000 cartridges, pods, syringes, or capsules in just eight hours with extreme accuracy. With the cartridge filler’s super-precise heating element, smart liquid transfer technology, and an advanced oil injection system, you’ll reduce waste and save on costs.
Full factory automation is still years off, but advances in machine learning, a subset of artificial intelligence, are getting us closer to that goal. Machine learning is powered by algorithms that can enable computers to actually learn on their own when fed large amounts of data. It has the power to transform entire operations to get products out faster, more efficiently, and targeted to the right people. Eventually, manufacturers will be able to create digital twins of their production floor to run what-if scenarios and design products with higher reliability.
3. Avoid costly issues with regular maintenance.
Facilities maintenance isn’t the most exciting aspect of a business, but it’s a crucial element nonetheless. Investing in preventive maintenance can save you lots of money in the long-term by avoiding costly repairs or replacements. Once again, smart technology and data are your friends. A major element of Industry 4.0 is actually moving beyond preventive maintenance to predictive maintenance. Smart machinery fit with IoT sensors can use predictive analytics to detect a potential problem before an equipment failure. This same technology can be fitted to other facilities systems, alerting you to perform maintenance on plumbing or HVAC systems before the first pipe starts to drip.
Plumbing is a good example, actually, since completely replacing your pipes costs considerably more and is far more disruptive to operations than hiring contractors to install pipelining as a preventive measure. Rather than tearing up floors and walls, the experts at APT Piping use a trenchless repair system to clean and fix old and damaged pipes. This method saves a ton on labor costs and delivers reliable performance with long service life. You’re much better off investing in preventive maintenance like this than waiting for the inevitable, much more expensive breakdown.
There are so many other ways to reinvest profits into your business, but these three are pretty universal. The main idea is that you need to get on board with new technology that will make your job easier and boost productivity and revenue to create more growth.