Let’s say – just for grins – that you’ll be receiving a tax refund this year. Because everyone’s tax situation is different, let’s use $1,500 as the amount of your tax refund.
If you’re anything like me, there are an endless number of entries on your “what I could do with an extra $1,500” list, but for the moment, let’s only pay attention to the ones that relate to your business. They might be some of the following:
- start (or add to) a cash reserve (to help smooth out the cash flow issues)
- build or revamp your website (make sure it is mobile-friendly!)
- hire a business coach or consultant (to work through issues holding you back)
- get more training (to build your skills or learn a new skill)
- hire a VA (so you can make better use of your time by delegating tasks that don’t require you)
- buy a new computer (to replace the clunker you’re currently working with)
- pay for summer camp for the kids (so you have more uninterrupted work time)
- go to that conference (and network your pants off!)
- advertising (to get more clients and customers)
You might need or want to do some or all of this list, or other items you would add. But depending on the item(s) you choose, $1,500 might not be enough.
Time to Prioritize
What items on your list represent investments and what items represent expenses, and how do you tell the difference? Ask yourself which items will help you generate more income versus just help to keep you afloat.
Being a web developer, I bet you think I’d tell you to invest in a website or in revamping the one you have, right? Certainly a well-designed website can help you generate more income, but depending on your situation, that might not be the most pressing need, and it might not be the item that generates you the most additional income.
Having been a one-woman show for a long time, I’m here to tell you that the one I would choose – if I had little kids at home – is SUMMER CAMP! (Or a babysitter!) This is the voice of experience, folks. I have been self-employed, working from my home for going on 13 years now. My youngest is turning 16 this year. I know whereof I speak on this one!
But since I don’t have little ones at home anymore, the next priority (for me) would be a tie between adding more paid help and adding to my cash reserve. Adding more paid help doing what? Pretty much anything that I can pay someone else to do for a lesser rate than my own. This is as close to cloning ourselves as we can get, and it is SO worth it!
I’d want to do both. But how?
Stretch Your Refund With a Working Capital Line of Credit
Maybe your refund isn’t enough to cover the costs of hiring the help you need (or addressing whichever item is most pressing on your list.) In that case, you might want to consider a working capital line of credit. Having instant access to funds to cover the costs of growing your business would allow you to accomplish more of the list with less of the stress. And as long as you use the funds to generate income, the fees you’ll pay will be well worth it.