Starting a new business or growing your existing business requires an investment of time and money. You may need equipment, furniture, systems or servers, office space, or professional services. Where will you get the capital needed to invest in your company’s future? More importantly, how do you spend that capital wisely to maximize the return on your investment?

The answer to these questions will not only impact your profitability, but may also determine whether you are successful in differentiating your small business from your competitors and increasing your productivity for the long run.

First, you need to determine how much capital you need and what your return will be on expenditures. A business plan is an essential first step. The Small Business Administration website1 has free tips on creating a business plan.

In order to calculate your capital requirements, determine what your essential expenditures will be, and where you might be able to save money and help preserve cash flow by reducing non-essentials. Will the money spent on these line items increase profitability and help cash flow? Would the purchase give you a competitive edge over rival businesses? Will this be a short-term cash outlay or an ongoing expense?  

You may find that your business will get the biggest return on your investment by spending money on the following:

  • Professional accounting and legal assistance, including tax preparation
  • Software to increase efficiency
  • Professional design services, from business cards to the look of your website and your logo
  • Education and training
  • Upgrades to improve customer service

Of course, the amount you spend and the priority ranking of each expenditure will be determined by the variants of your specific business, how long it has been operational, and the amount of cash available.

Next, you need to calculate how much you can afford to spend and what you expect the return on your investment will be. If you invest in that new accounting software, you may recover the cost quickly in reduced debt and time employees spend chasing those outstanding receivables. If you purchase that new Customer Relations Management tool, you may recover the cost quickly with increased revenue from sales and more satisfied customers. If you invest in a more professionally-designed web site, you may attract more customer traffic.

If your business is profitable, you may have more leeway in your cash outlays. That does not mean you should be throwing your profits away! Utilize free or low- cost social media in your advertising and marketing, and refrain from investing in the latest technology until the cost comes down.

Next, consider your financing options. Is it more cost-effective to lease rather than buy office equipment? Maybe you should sell old equipment that has outlived its useful life. Are current interest rates more favorable to purchasing new office real estate instead of leasing? Perhaps you should restructure your existing debt and refinance at lower interest rates. Remember to review your decisions and your priorities on a periodic basis, at least every year.

Once you have decided which investments to pursue and their estimated return on investment, talk to your business banker for the best financing terms.  Nevada State Bank is a Preferred SBA lender, and can offer low down payment terms and rates for real estate purchases, business lines of credit, term loans, and equipment leasing.2

Bottom line?  It pays to invest wisely in your company to maximize your investment.


2. Loans subject to credit approval. Terms and conditions apply. See a banker for details.