If You Had $1,000,000...

[NewsletterScott]

...How would you spend it to positively push your business forward?

(I look forward to this discussion)

-Scott Bradley

 

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[MJ DeMarco]

I'd spend it when only needed. I think just because you have $1M to grow a business, doesn't mean it should be spent. I think a lot of companies spend money just to spend money. I'm always amazed how some startups get $X millions in funding and 18 months later, they're broke and need more financing. My frame of attack has always been to only spend money when there is an attributable ROI to the expenditure. (Or to support operations growth.) Custom branded water bottles are nice, but have no place in a startup.

 

[NewsletterScott]

I'd spend it when only needed. I think just because you have $1M to grow a business, doesn't mean it should be spent. I think a lot of companies spend money just to spend money. I'm always amazed how some startups get $X millions in funding and 18 months later, they're broke and need more financing. My frame of attack has always been to only spend money when there is an attributable ROI to the expenditure. (Or to support operations growth.) Custom branded water bottles are nice, but have no place in a startup.

Great points MJ.

I do agree with you that a lot of companies spend money just to spend money. I think they do it mostly because they think that by just spending money they are actually doing "business."

Here is a thought, you aren't doing business unless your focus is on moving something of value to someone who wants what you are selling. To do that you need a product and a distribution mechanism that can scale. To make this happen you need marketing to the targeted niche, and the sales system that helps you do this in a manner where you can dedicate X hours a week but create an exponential result...just like you were when you were building Limos.com in the early days.

I also agree with you about how these startup companies blow through their cash so fast...just look at some of the past social media companies that have been funded...it is insane how these investors continue to dump millions into the companies when there isn't a positive return in sight (e.g. Digg.com - that place is a ghost town compared to what it was over a year ago)...and the investors will probably chalk it up as a mistake.

To answer the initial question though...

For me with my current venture I am focusing on (newsletter publishing), I would spend 100% of it on marketing, driving traffic, and building the newsletter subscriber list.

I would probably take out ads on every business focused ezine/solo ad, I could find that would be in alignment with my niche, and focus on optimizing my page I am driving the traffic to the best I possibly can. I would also focus on placing ads on high trafficked blogs, and even do some magazine media buys in Entrepreneur, Inc, and Fast Company.

The bigger the newsletter list, the more value I can deliver to advertisers, and the more value I can create by selling my products to the audience.

For now...since I don't have 1,000,000 to spend on marketing, I will build the list one at a time, and hopefully count on people in the niche to tell their friends because the content is really valuable....just like people have done with your book.

-Scott Bradley

 

[Rickson9]

Those who do not understand finance generally subscribe to the bladder theory of capital allocation. That is, the more money that builds up, the stronger the urge to piss it all away.

 

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[AJGlobal]

In a booming economy like we had here in AZ back in '05 / '06 that would be an easy answer. Buy and flip everything you could get your hands on that was real estate..........forget about what your business is.

I remember the subdivision to the south of me that was being developed during the boom. There were people fighting over lots and the builder would hold lotteries and you had to be present to get a lot. It was insane. I remember seeing hundreds and hundreds of cars on the side of the road............weekend after weekend.

In today's economy I would be a lot more conservative and take small portions of that million and test all the different avenues that are available to me to gain business until I found one that was worth using more of that million.

Be inventive with some of it and spend it on something that sounds absolutely insane (again, just a test, don't go crazy). You never know what is going to work and unless you are willing to take the risk to see what happens you won't ever know. I've taken some chances in my business and done and tried things that on paper didn't make sense. I did it anyway (just as a test) and the cost was minimal, but it ended up working out and I went full speed ahead with it and it ended up making the company the most its ever made. All based on an Idea that I came up with and sold my business partner on.

The best part was that it didn't cost anywhere near a million, but the end results almost doubled our gross revenues.

I remember MJ and I talking about the housing boom years ago and him saying something about a plumber he was speaking to buying properties to flip. That is when you know its time to sell, and boy was he right !!!!!!!!!

 

[NewsletterScott]

I remember MJ and I talking about the housing boom years ago and him saying something about a plumber he was speaking to buying properties to flip. That is when you know its time to sell, and boy was he right !!!!!!!!!

Ain't that the truth!

 

[TaxGuy]

My frame of attack has always been to only spend money when there is an attributable ROI to the expenditure. (Or to support operations growth.)

Please elaborate on this one...

I feel like the biggest idiot in the world b/c we have invested in marketing and operations(i.e. software/equipment needed for our business) and I feel like the marketing has had a big fat ZERO in ROI and really feel like we're in the desert of desertion now

Did you invest in marketing when building the lead gen business?(I know you did SEO, but did you do PPC or any other paid marketing)

If so, what were some of your thresholds(time/money invested) to decide whether or not a certain campaign was worth pursuing or just cut your losses?

The marketing we've invested in so far was Facebook and Adwords, granted we didn't invest much, we got absolutely no response(not even an inquiry for a free consultation). Then we went crazy and invested in a video email marketing campaign that has really run us up a wall. While in theory it would work, it requires a lot of list building and more of an affiliate marketing type skillset that we don't currently posses for it to work, in which case it's not worth investing money in when it really is gonna just take time and effort get an ROI.

It seems like most of the buzz from the networking we've done is to do 2 things, neither of which cost much(aside from time/travel expenses):

1) network like crazy and try to build JV partnerships to share client bases to sell to

2) develop and distribute a ton of free information that has value

While they both make sense, the apprehensions are #1 knowing who is really out there to help provide value to OUR clients and in return give us leads that are interested in what we have to offer(saving them money and/or stress), #2 - what can we give away for free that has value that people want? - i.e. balancing the extreme of "selling the farm" with "giving away something people don't want or care for"

 

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[GivingChristian]

Going back to thread title.. If i had $1m... I'd put up a business of my own. Like what my principal told me, she read, "On crisis, go for the food business". I just want to share this, no matter what happens or how poor people get - WE all still have to eat, right? So $1m is more than enough to start your own business. Just plan it right, and see things to consider, like, location, target market, expenses, income, security and etc.

 

[Ska2free]

...How would you spend it to positively push your business forward?

While it's not a million dollars in our case, this is actually a pretty real scenario for my company at year end...and I imagine we're not the only company, breathing a sigh of relief at a positive year, who takes a look at projected year end net profits and starts thinking of positive ways to use that money instead of giving a third to uncle Sam.

We typically use it for equipment purchases...section 179 depreciation gives us an instant tax benefit, and we stay cutting edge (with ROI benefits to both productivity and client retention), calculate SEP contributions (ROI to employee retention, partner retirement accounts, and tax reduction), and sometimes a marketing push.

But sometimes, it's better to just pay taxes...I'd rather forfeit a third to the government than piss 100% away unproductively. (But if anyone has other suggestions for legally avoiding the taxman, I'm all ears!)

 

[TaxGuy]

(But if anyone has other suggestions for legally avoiding the taxman, I'm all ears!)

That's our business

We typically use it for equipment purchases...section 179 depreciation gives us an instant tax benefit, and we stay cutting edge (with ROI benefits to both productivity and client retention), calculate SEP contributions (ROI to employee retention, partner retirement accounts, and tax reduction), and sometimes a marketing push.

All good ideas and sounds like you know that the S179 is more about having the right tools for the job and being cutting edge than just getting a tax benefit as well as working your SEP and not just being like a slowlaner who wants to get the same benefit for maxing their 401k/IRA

 

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[Kung Fu Steve]

All I know is that every time I spend money in my business I find out I could have got what I needed for cheaper or free..

 

[Icy]

All I know is that every time I spend money in my business I find out I could have got what I needed for cheaper or free..

But do you know if it would have been as good in terms of quality\reliability if you went with the cheaper or free version? (Genuine question)

 

[Kung Fu Steve]

But do you know if it would have been as good in terms of quality\reliability if you went with the cheaper or free version? (Genuine question)

Oh yes. For example, how much does it cost to get a customer? Well we can all easily figure out how many sales we're making and how much we're spending on advertising - but - could you get just as many for free? Yes. I can tell you I've spent upwards of 3k on advertising some months and only get 20 some leads, where as other months I've spent $200 and got over 60.

I know what brings in the most clients for the least spending, the trick is there are always timed windows of opportunity with things like this. If you know when to look and where to look they are easy to find. For my industry, I hit 5 parades throughout the summer, (total cost approx. $500) and will get new people in ALL year long. ROI is a lot higher.

Now I can't rely on parades in the winter (especially not in Minnesota), but at that point then I am looking for other low cost/no cost advertising such as business expos, or creating a value event for free.

Let me ask you this: what's the cost of a referral? $0. Maybe $50 if you have some incentive program for your business. (depends on the business of course) but what is the quality of a referral lead? Almost 100%.

So to answer your question I should have responded like this:

"All I know is that every time I spend money in my business on ANYTHING, I find out I could have got what I needed (and better quality!) for cheaper or free!"

 

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[Russ H]

All I know is that every time I spend money in my business I find out I could have got what I needed for cheaper or free.

Steve, life in general is like that.

And it's not just cheaper or free.

Sometimes, it's better. WAY better.

(like word of mouth referrals)

-Russ H.

 

[Battleship]

But I'd still spend at least a part on my business if needed (representative meeting rooms, more employees etc.). But I would also take some holidays, see my family, buy some stuff for me (I collect automatic watches - or maybe a new car) jewelry for my wife, put sth. aside for my son's college, maybe donate a part... One million is so much money that you can do more with it than just filling budget holes - depends on the business, of course...

 

[DeletedUser2]

I remember MJ and I talking about the housing boom years ago and him saying something about a plumber he was speaking to buying properties to flip. That is when you know its time to sell, and boy was he right !!!!!!!!!

my moment of clarity was when a permanent makeup artist was building a 850K spec house in Arizona.

I sold all my apartments and houses right after that. it was over. 2006-2007.

 

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[Lights]

Hmmm... I wouldn't buy anything unless I need it for my success.

 

[Blacktye6000]

I'd start with multi unit apartment buildings, Then build up to sfh.

 

[max momo]

IF I HAD to spend 1M, on my business, I would buy an existing distressed company/inventory/network that complements my existing business. That is, BUY UP my weaknesses in a depressed price environment instead of building up the weaker areas of my business. Just a time for cash trade/shortcut.

 

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[ageofz]

I'd invest in myself and my business. I'd maximize the potential of the niche I'm currently in and replicate this business model in other niches. I personally wouldn't invest in liabilities (cars, toys etc) because I know what's here today isn't guaranteed tomorrow. Therefore, my top priorities would be to diversify income streams and replicate my working business model right now.

Since I run an online business, I'd invest in:

- Developing new web properties in other niches.
- A lead distribution management system to manage all leads in all my niches.
- SEO. My biggest skillset and competitive advantage is SEO, therefore I'd invest in staying on top of SEO trends, hiring more Virtual Assistants to manage my linkbuilding, and invest in networking with the best in the industry.
- Social marketing. I currently don't see much ROI in this compared to other alternatives, but I still would invest in it since it complements SEO. I wouldn't invest a lot in this, but once I figure out how to make profit off of it, I'd push more money at this.
- Content writers. In addition to hiring VAs for SEO, I'd hire more content writers for my web properties to keep them fresh, unique, relevant and valuable to users.
- Copywriters. I'd definitely invest in ways to improve conversion rates.
- An office. I'm tired of working from my apartment!
- Buy up competitors. I have a few competitors that don't make much money because they can't convert in as many areas as I can. But they have websites that I can make a lot more profitable. I'd buy up some of these properties.

Most importantly, I'd hold on to as much of that million as possible. If I were to spend money, it better go towards cash flow and assets. Test small, see a positive ROI then invest big.

 

[deepestblue]

Buy up competitors. I have a few competitors that don't make much money because they can't convert in as many areas as I can. But they have websites that I can make a lot more profitable. I'd buy up some of these properties.

Of all your good points above this one is the one that would likely get you up the ladder faster than anything: Buying underperforming properties and turning them into strong profit centers could compound net income quickly.

 

[ageofz]

Of all your good points above this one is the one that would likely get you up the ladder faster than anything: Buying underperforming properties and turning them into strong profit centers could compound net income quickly.

That's what I'm saving money for now . If I can't buy them, I'm going to figure out how to make them affiliates.

 

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[Battleship]

But I'd still spend at least a part on my business if needed (representative meeting rooms, more employees etc.). But I would also take some holidays, see my family, buy some stuff for me (I collect automatic watches - or maybe a new car) jewelry for my wife, put sth. aside for my son's college, maybe donate a part... One million is so much money that you can do more with it than just filling budget holes - depends on the business, of course...

I'd invest in myself and my business.

Since I run an online business, I'd invest in:

- SEO. My biggest skillset and competitive advantage is SEO, therefore I'd invest in staying on top of SEO trends, hiring more Virtual Assistants to manage my linkbuilding, and invest in networking with the best in the industry.
- Buy up competitors. I have a few competitors that don't make much money because they can't convert in as many areas as I can. But they have websites that I can make a lot more profitable. I'd buy up some of these properties.

I think these are thes best ideas, even for a not-online-business.
But wouldn't any of you take a bit of the money for himself/his family? I mean, it can't be too bad to give sth. back to your family because (at least in my case), we lacked a lot of things before my business became profitable... So, if I had one Million, I'd also try to recompense that - without being wasteful, of course...

 

[ageofz]

I think these are thes best ideas, even for a not-online-business.
But wouldn't any of you take a bit of the money for himself/his family? I mean, it can't be too bad to give sth. back to your family because (at least in my case), we lacked a lot of things before my business became profitable... So, if I had one Million, I'd also try to recompense that - without being wasteful, of course...

Well, the OP asked how we'd use the million to invest in our business. That being said, I'm young and don't really care about material wealth. I want freedom, not a fancy car. I also don't have a family to provide for yet. Of course, if something important came up I would make other considerations for the use of that million.