5 Investments Your Business Should be Making
By Maggie Bloom,
1. Invest in Your Work Force
Above everything else, you've got to invest in your team. None of this would've been possible without them. So, you should reward them by giving them a raise. Increasing your workforce's pay rate tends to have some hidden benefits. Attracting new, quality talent is easier when you're offering more than your competitors. Plus, you'll retain all your existing employees as well. By avoiding the need for replacements, you'll save a ton in the long run. That's why investing in your team is such a great investment. They'll even be willing to work harder while they're helping you build your company. Always make sure you're investing in them before you invest in other things. Paying them first has a huge payoff.
After you've invested in your team, it's time to diversify. Take some of your revenue and put it toward real estate. Real estate investments benefit you in two ways, appreciation, and passive income. Your properties should appreciate faster than you'd earn interest on a savings account. So, property tends to be a safe place to store your money. Also, you can rent out the properties while you're holding them. Not only do you build equity, but you can also build new revenue streams. Rental income is one of the most stable forms of passive income. Building a property portfolio is a fast track to wealth because of these factors.
3. Eliminate All Debts
Now, you've got some property, and you're paying your team well. The next thing you've got to do is pay off all your debts. Reducing your debt load is going to relieve a lot of financial pressure from your business. Most of the time, we forget about how much debt weighs us down while we're building something. Debt is usually necessary to get it off the ground. However, in the long term, debt is a burden. Holding debt means you've got to pay interest. Compound interest is far more powerful than most people realize. By holding debt for too long, you could pay more on interest than principal. Plus, by getting rid of debt, you'll have fewer monthly obligations. As such, you'll feel like you're free to make riskier moves.
Consider investing and opening a Delaware statutory trust to hold all your properties. Holding them in a DST makes it possible to avoid capital gains taxes. Usually, you've got to pay upward of 50% on all short-term capital gains. However, you can initiate a 1031 trust exchange to avoid any taxes. It's a legal method used to shield investors from these devastating taxes.
Finally, it's time to look at your company itself. All companies are made of the same parts. You've got the people who make the company tick. And, there's all the equipment that makes the company possible. Without both of them, you'd just have an empty building. Hopefully, you've already compensated your team. Now, you should invest in better equipment. The better your equipment, the better you'll be able to operate. Any customer-focused enterprise should want their teams to have the best equipment. That's how they're able to deliver more than the competitors to all their customers. Upgrading your equipment should boost your revenues, too. If your teams can be more productive, you'll be able to sell more.
Business investments aren't much different from individual ones. However, you've got to approach them from another angle. Using the same mentality you would for yourself has downsides. You might mistake the company's success for your own. All companies work as a collection of different working parts. Each of them is integral to its success. Still, you can follow similar principles to traditional investing. Start early and invest often. Diversify your portfolio. These two rules should be enough to get a good start.
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