Three tips on making the right business investment decisions

Risk is a term known well to small business owners.

It could probably be dubbed the entrepreneurs’ credence.

But despite the confidence business owners show when turning their backs on a cushy regular paycheck in favour of being their own boss, many often hesitate before investing in assets to grow their business.

What if the risk doesn’t pay off this time?

For a small business owner, the answer to that could mean the difference between results you can bank on and going bankrupt.

Founder and owner of three small businesses, Melissa Browne – who also happens to be a qualified accountant and business advisor – has three tips for how to make the right business investment decisions.

1. Don’t trust your gut, trust your numbers

“Too often business owners rely on their gut feel which can be problematic for making investment decisions,” Melissa says.

Entrepreneurs need to validate their instincts with strategic planning before investing in assets to grow their business.

“Business owners need to understand the numbers first.”

If your balance sheets or investment profitability models don’t look great, look for better investment opportunities, Melissa advises.

Understanding business finances before making a decsion

Understand your business’ finances before making an investment decision, business expert and entrepreneur Melissa Browne says.

2. Stop over-familiarising with your staff

“We often call our business our baby, and our staff our family, and while that’s a beautiful concept, we then bring too much emotion into our business.”

Melissa says emotions can cause bias in decision-making that could prove detrimental.

“You need to be willing to pull the plug on decisions that look wrong, without getting emotional.”

3. Hire slowly, fire fast

Investing in new staff is important, but it can quickly prove troublesome if you haven’t carefully screened candidates, Melissa says.

Keeping unsuitable or unproductive staff, for fear of upsetting ‘the work family’, can also be damaging to your business.

She knows business owners understand this in theory, but believes they often struggle to take action.

Small business owner communicating with employee

Business owners treating their co-workers like family can be detrimental, business expert and entrepreneur Melissa Browne says.

That’s partly due to the fear small business owners have that firing someone is admitting a “failure” to recognise an unsuitable candidate during the recruitment process.

“As a business owner, it’s a horrible feeling but the quicker we get over ourselves and learn from the experience, we can move on.”

Melissa says those learning experiences can create an opportunity to set new goals for smarter business growth.

Think your plan for investment could be worth the risk? Take Melissa’s advice on how to determine return on investment.