When to spend and when to cut back

Transcript

As a business owner, it can be really hard knowing when is the right time to lean in and when is the right time to chill for a bit. Today I want to talk to you about when to spend and when to cut back in business.

Today’s episode of the podcast is brought to you by my spend verse save challenge. Inside this challenge you’ll get the clarity about where to invest in your business and where to cut back so that you can maximize the dollars in your business bank account and create your most profitable year in business. Yet in this live three day challenge, on day one, you will learn the three money mistakes most business owners make so you can avoid them. You will identify the fear that you have about money and how this plays into limiting your growth. On day two, you’ll discover the profit busters versus the profit boosters to focus your business investments wisely. You will map out your personal money values so you know what areas to spend in versus where to save. And on day three, you’ll identify your profit investment decisions to chase bottom line growth and create your plan to explode your business profit with intention. To sign up for this live three day challenge, you can do so via the link in the show notes for today’s episode. Oh, and did I mention that the training is free? I hope to see you there.

So let’s come back to the topic of today’s episode of the podcast about when to invest and when to cut back. I won’t be talking about the details of what you should be investing in and where to cut back because that’s what’s covered inside the free 3 day challenge that I mentioned earlier. But what I do want to talk about is the when. When is it a good time to cut back and when is it a good time to invest in uncertain and changing times?

It might be tempting to cut back and that might well make sense, but that doesn’t need to be your default stance. Don’t freak out because what people are saying is going on in the wider economy, or you don’t need to do what other people around you are doing. If you are trying to make the decision whether it’s a good time to cut back or a good time to invest, here’s a couple of things to consider.

Asking yourself, is now the RIGHT time to grow and lean in (rather than listening to outside noise).

The first thing, are you wanting to grow right now? Like is now the time that you are really ready and keen to level up? Investing is about leaning in. There will be times in your business journey when you are ready to lean in, when you are hungry for it and energetically ready. For example, after my car accident, if you’re a longtime listener of the podcast, you know that last year I was in a serious car accident. I was not in a position to go and hire a high power, really expensive coach or to go and set up a ton of marketing funnels to drive new customers to me, I was focused on my recovery and just getting the support I needed to keep the business ticking along. I was not in a period of time where I’m ready to go all in and go for a high growth period of time. Compare that to just recently, I have hired not just one, but two coaches. I am really ready to scale and to rapidly grow the business. And so to work through my stories, limitations, and also have support around strategies. I know the best way for me to invest is to work with coach and in this case two coaches on different parts of my business. You know, one is inside a mastermind container and one is a one-to-one business.

So that’s just one example. But if you are thinking about is now the right time? How are you feeling about it? Are you ready to grow right now?

Tuning into your energy around making investment decisions

The next thing to consider is, from what energy are you making this decision? Sometimes when people go and hire the team member, the coach invest in marketing, join the course, whatever, they’re doing it from a place of fear and lack.

So for example, hopefully this investment, you know, this team member, whatever can fix things. I’m in such a bad place right now that spending this money will hopefully sort that all out. Are you making the decision from that place or are you making the decision because you’re feeling expanded and excited? Yes, you might be, you know, going through a challenging time, but you’re not making the investment from a place of fear and lack. You’re making it from a place of I’m really excited to be hiring the team member doing the course, whatever it might be, the energy from which you invest heavily affects your outcomes. And I actually had an example where someone was reached out to work with me and they said, I’m giving you my last, I can’t remember what the amount was, but you know, let’s say $3,000. And they said, you have to make sure that I make more money.

And instantly that was a red flag for me. And I said, I don’t think this is the right place for you to be coming into a, a coaching relationship from a place of desperation and need. I really believe that if you are wanting to get the most out of an investment, you have to be open to the fact that there might not be a return in the short or even the long term. There are no guarantees with investments. And if you are making a decision from a place of lack and scarcity, it’s like this thing has to work as compared to I’m really excited to do this thing. And yeah, I understand there’s a a possibility that it might not deliver the return that I want straight away, but I’m okay with that. It still feels really aligned. Check in on the energy.

Analyzing your capacity for investment and growth

If you are looking down the barrel of leaning in, the next question to ask when you’re considering whether to spend or whether to cut back is, do you have the capacity to invest? Now, when I say this, what this looks like is different for everyone. Capacity to invest doesn’t mean that you necessarily have all the money sitting there, if that makes sense. So let me share an example. One of my business friends actually remortgaged her house because she felt so aligned to lean into an investment to work with a mentor that she wanted to work with. Now, for me, at this point in my life, that doesn’t feel aligned and that’s okay. What the capacity to invest looks like is different for everyone. I know someone who said to me, I don’t have the money for that. And I know they literally had over a hundred thousand dollars in their business bank account, but they didn’t want dig into their savings account. So what this looks like, the capacity to invest is different for everyone, but I just want you to check in. Do I have the capacity? Does this feel aligned? Do I feel comfortable to make this level of investment? And as I said, oh yeah, this looks like is different for everyone.

Making an informed decision based on your ROI (return on investment)

The last thing that I want you to think about whether you cut back or spend, is that I want you to invest strategically. Don’t invest like, yeah, cool. I want hire a team member or yeah, let’s go and join that program. Just stop and think about what is the intention behind the investment? When are you anticipating you’ll get a return? How much are you expecting to make from the investment? Again, what this looks like is really different for everyone. When I used to work in corporates, some corporate companies that I worked for were happy to wait five years to even recover the cost of their investment. Maybe for you, you are wanting a return a bit sooner than that, but really sit down and I’m definitely an intuition person, but I do also think there’s a logical component that needs to come into a decision making process, which is really sit down and have a look at the cold hard numbers and what you are anticipating.

You’ll get back. I call this decision an R O I or return on investment decision. It’s something that I use in my own business I support my husband with where he recently hired a new team member and we sat down and put together a spreadsheet and said, okay, what do, what are we anticipating the sales uplift will be? What are their expenses? What are the other costs that we need to consider? Is this a worthwhile investment? And when will the cost be recovered? Similarly, if you were looking to make some cutbacks, you can flip this on its head, if you were to cut back some expenses in your business, for example, if you were to turn off your Facebook ads, what is the knock on effect of that? Maybe in the short term it won’t have a huge impact. Maybe, I don’t know, maybe it will, maybe it won’t.

But what is the, the longer term effect that this will have If you aren’t working with a coach, what does that look like for your business? If you cut back that cost, what is the long-term effect that it will have on your overall profitability? When you are making decisions about spending or cutting back, I think it’s a great idea to make a plan around the outflows and the inflows of cash. And this might also support your investment decision.

Today’s episode has really been about the when, when to spend and when to cut back. If you are wanting to dive into the what and which areas of your business to spend in and which areas to cut back in, make sure that you sign up for my free Spend vs Save Challenge. Over the 3 day challenge, we’ll be going through how to invest to best support the growth that you desire in your business, and we’ll specifically be uncovering the areas in which you can lean into and the areas that you should cut your spending to help grow your profit with intention. You can join the 3 Day Challenge via the link in the show notes for today’s episode.

So to sum up what we spoke about today, when you were thinking about the right time to invest and the right time to cut your costs, there’s a couple of things to think about.

1. When are you wanting to grow? Right now? Are you really ready to lean in?
2. What is your energy are you making this investment decision?
3. What is your capacity to invest. Does spending money right now feel aligned or does it feel more aligned to perhaps look at cutting your expenses?
4. When are you anticipating you’ll get a return? And how much are you anticipating you will receive?

Thank you so much for joining for today’s episode of the podcast. I love chatting numbers, profit, all things money with you, so I appreciate you tuning in and I hope to see you inside my challenge.

I hope you are feeling inspired and excited about what is possible for you when it comes to money. It takes a lot of time and energy to create a podcast. So I’d be very grateful if you could take the time to hit subscribe, write me a review and share any of your favorite episodes with your audience on social media. The more people that we can reach, the more people we can empower to earn more in their business because you can and should be earning more money.