Skip to main content

He who dares wins?

At a time when so many enterprises are struggling it might seem strange to be talking about the dangers of under-investing in your business. But many experts believe that the best time to invest in a business is when markets are tough, partly because it gives you a head start over your rivals when the recovery begins.

Of course, few businesses have much spare cash lying around to invest in processes or technology, which is why it is a good time to look at all the options for funding investment. With interest rates low and likely to stay that way for some time to come, investing in a business has become a more attractive option for those looking to generating a return.

No time to waste

Some investments have to be undertaken simply because firms have to keep up, which can be described as ‘defensive expenditure’. In other words they had to spend money or their competitors would take a greater market share.

Similarly there are many reasons to invest in better digital engagement with customers. It can be difficult to quantify the benefits of this type of investment, but applying traditional finance techniques will keep the business on its toes when questions are asked about costs and benefits.

Get the balance right

Many businesses have implemented staff incentive schemes where employees are rewarded for meeting targets relating to increased profitability. When used correctly incentives can be a useful way of encouraging hard work, but in this case they can have unfavourable consequences.

In fast moving markets innovation is vital to remaining competitive, which is why so many of the world’s largest corporations spend billions every year on research and development.

Smaller business could only dream of spending such sums, but when management remuneration is linked to profitability there can be a temptation to hold off on investing in projects that might take years to deliver a return in favour of minimising expenditure and inflating profits in the short term.

Be careful where the money goes

When consumer confidence and business confidence is low there is a temptation to retreat into holding cash. If you manage to overcome this you need to think about how you will spend the money.

For example, when the labour market is depressed you might be inclined to increase your headcount, but this will also increase your wage bill and with pressure on government to increase the living wage businesses operating on tight margins may see their staff costs rise even further.

On the other hand, acquiring new machinery or updating old equipment (either by purchasing or leasing) should increase your productivity.

Regardless of which approach you take, using a cloud-based accounting solution such as Big Red Cloud will help you determine whether you have invested in the right areas of your business.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.