How Finance Savvy CEO®s Invests Their Business Tax Refund
According to the IRS cumulative statistics report, the average tax refund in the United States as of April 12, 2024 (for the tax year 2023) hovered around $2,948, compared to $2,840 in the tax year 2022.
Some of the business owners see this tax refund as a “personal” bonus. But for a Finance Savvy CEO®, this money is an opportunity to strategically invest in your business and drive growth.
You may be tempted to use this tax refund to indulge in a treat or have a well-deserved vacation, and that may not necessarily be a bad idea, BUT, you should also remember that every dollar invested back into the business has the potential to generate even greater returns. By reinvesting the tax refund into strategic areas of your business, you can make your tax refund make you more money and poise your business for greater growth.
In this article, we’ll explore how Finance Savvy CEO®s are making the most of their tax returns by strategically investing in their businesses, since after all, a Finance Savvy CEO® understands the importance of putting their money to work for them. Right? Okay, ready, Let’s dive in!
FIRST AND FOREMOST, REVIEW YOUR STRATEGIC PLAN
To determine how to invest the money you received from the tax returns, review your strategic plan first – it’s a tool you should have at your disposal at any point in time. A business Strategic Plan is about making key decisions on where you should play, how you will play, and how you will ultimately win. Consider your SWOT Analysis and focus on areas where you can capitalize on your strengths, support your weaknesses, utilize opportunities, and mitigate threats. Outline where you focus on right now based on your SWOT Analysis to be able to achieve your next milestone.
DETERMINE YOUR NEAREST MILESTONES
Based on your strategic plan, determine your nearest milestone – or goal you’re trying to reach next. Ask yourself:
- What are my most pressing, highest value, and nearest milestones that the business needs to achieve?
- What does it cost to achieve that milestone? This cost encompasses not only the financial aspect but also considers the non-financial resources that may be required to achieve this milestone by the desired the time or date.
The cost aspect to achieve your nearest milestone will reveal a potential area for investing your tax refund.
KEY AREAS OF IVESTMENT CONSIDERSION
You’ve assessed your strategic plan, you’ve identified your nearest milestones and the costs to achieve it, but perhaps you’re still unclear on where you should invest to get a promising return. If that’s the case, here are a few key investment areas to consider that when implemented well, have high ROIs:
#1 – Systems Automation
Think about key areas of your business that are highly manual. Are you able to invest in software to help you automate some of these incredibly manual processes? Automating manual processes can save you big time (no pun intended) in the long run – saved hours and better accuracy is just the beginning. Automated processes are critical to enabling you to scale effectively.
Your time as the CEO is valuable and by investing tax refunds in systems automation, you can streamline your operations and free up valuable time and resources to focus on growing your business. Always remember, work smarter, not harder!
#2 – Key Talents
Investing tax refunds in hiring key talents is a strategic move that can significantly advance your business’s strategic plan. Key talent and “Good people” in roles that will help you grow your top line or operate more efficiently to improve your bottom line are great investments. Look for individuals who align with your company culture, share your vision for the future, and are ready to roll up their sleeves with you to get the business to the next big milestone.
#3 – Anything That Furthers Your SMART Financial Goals
Every investment you make with your tax refund should align with your SMART financial goals. Whether it’s increasing revenue, reducing costs, or improving efficiency, make sure your investments are strategic and will help you move closer to your long-term objectives. Take a look at your financial goals and identify areas where you can make the biggest impact with your tax refund.
RESTRUCTURE DEBT
If your business has existing debt, consider using some of your tax refunds to restructure it. Whether it’s consolidating high-interest loans, renegotiating terms with creditors, or paying off debt entirely, reducing your debt burden can free up cash flow and improve your financial flexibility. Not only will this help you save money on interest payments, but it will also make it easier to invest in other areas of your business.
BOTTOM LINE
You should see your tax refund as way more than just a bonus to yourself as the business owner; it’s an opportunity to strategically invest in your business and drive growth. By reinvesting your tax refund into strategic areas of your business, you can position yourself for long-term success and drive towards achieving your business goals more efficiently.
From reviewing your strategic plan to determining your nearest milestones, every step you take is crucial to getting a positive ROI. By aligning your investments with your strategic goals, whether it’s automating systems, hiring key talents, or paying off debt,, you’re laying the groundwork for future growth. So, make the most of your tax refund and take your business to the next level!
Do you want someone to help you look at your existing financials and provide recommendations on your financial strategy or financial health to help you make important financial business decisions, or perhaps a second strategic eye to help you decide how to invest your extra cash? Click here for a 1-on-1 exclusive Ongoing Strategic and Financial Coaching and Advisory.
