Reinvestment is the Best Growth Strategy

Most businesses, regardless of size, are reinvesting less than 5% of their profits in business improvement, innovation development and/or future growth. The least risky, most effective and efficient method for fueling extraordinary business growth is not through raising equity capital, borrowing money or selling off profitable pieces of your company. It is reinvesting a substantial portion (30% to 50%) of your business’s profits into business improvement, product development, brand development, innovation and/or market expansion. However, reinvesting profits for the sake of reinvestment will not necessarily fuel growth unless it is done strategically within the means that the business has at its disposal. Fueling extraordinary growth has to be driven by a long term vision, a mission and challenging business objectives that are supported by the entire organization’s harmonized efforts. Business strategies can serve as a road map of how to get from the current business state to realizing a future state that reflects the business leader’s vision. The amount of reinvestment should be based on available funds from former, current and future projected profits and what is needed to support growth strategies. If all the funding that is needed to support achieving the future vision are not available through profits earned, then a lean strategic approach can be used to build available funding over time through incremental growth initiatives. By approaching reinvestment in business growth this way, you may sacrifice a small amount of shareholder value in the short term, but make up for it and then some with extraordinary business growth and growth in shareholder value in the long run.

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