Most experts recommend that it is not fiscally healthy to take all the money OUT of a fledgling business. It is important to reinvest in the business in order to keep it growing and solvent. Many of us start our home businesses to provide income and cash flow for our family budget and we may be unsure how to balance taking care of our family’s financial needs, with investing in our growing home business.
Buying needed equipment, purchasing more inventory, making sure we have the supplies we need–these are all some of the ways we can reinvest in our home businesses. We may wonder, however, where we can find the money in our tight budgets to dedicate some to the business. Setting aside a specific amount or specific percentage each month (or week or quarter) to put into a reserve fund for the business is one way we can reinvest. Just taking that money and putting it into a specific account periodically can give us added security.
Another way to reinvest in the business, or find money to reinvest is to dedicate any money that is earned OVER budget to go into the reserve fund. If you make an extra sale or get a bonus of some sort that you hadn’t budgeted into your cash flow, you can put this away in a reserve fund and not even miss it from your family budget.
Finally, consider investing interest or money that is being made off of a specific investment as capital for the business. This way you can just funnel that revenue back into the business and never consider it as part of your cash flow or money that you earn to use in the family or household budget.
Reinvesting in your home business can not only make your business stronger, it can give your overall financial picture a boost as you will have diversity and develop good habits for saving and investing.