A sudden influx of money due to a tax refund can be a major boon for any small business struggling to access working capital. While the immediate impulse for some small business owners might be to reward themselves and cut a check to buy a new car or some other kind of luxury, it’s best to sometimes take a second and review the variety of options available for what to do with that business tax refund.
Here are several options to put that business tax refund to good use:
Invest the money in the business
For some owners, this is one of the first things he or she thinks about doing
with the money once the IRS’s check has cleared. Putting the money right back into the business is a good idea to shore up any weak spots and truly position the company for success in the coming year. This is especially true for organizations that might have been struggling to make ends meet or reach the sales quotas originally targeted.
Although it can be a pricey investment, purchasing the latest technology can help streamline operations and boost the company’s efficiency by reducing the labor costs associated with duplicate data entry or migration. Whether it’s the latest point-of-sale devices for retailers or a new cloud-based ERP system for small manufacturers, staying up to date on the most recent technological factors that can benefit your business can provide a significant edge over the competition and strategically position the company for success. When considering these options, it’s important for owners to track how well the new technology is performing and ensure that the company is receiving the best possible ROI for the purchase.
Pay down debt
Having a regular and consistent line of credit can be a lifesaver for many companies. However, no matter how low of an interest rate the company might have on the cost of this capital, it’s in the business’s best interest to eliminate any lingering debts as soon as possible. This will ultimately put the enterprise on a stronger financial footing, and open the door for new investment opportunities in the future. Instead of having the debt hanging around the company’s neck and dragging down operations, alleviate the weight of this burden with any money received in a tax deduction.
Upgrade the website
Having a solid online presence is crucial in this digital day and age. Customers of every generation now rely on a company’s website to gather information about the business, from sales to marketing to product details even to community outreach or philanthropic endeavors. Having a page that is outdated or cumbersome to navigate can turn away customers before they even get a chance to try the products or services offered. Spending some money to update the website and creating a better user experience can go a long way to boost sales and retain customers.
Further, an online presence must be complemented with a mobile app nowadays too. As noted by Forbes contributor Louis Columbus, between 2015 and 2020, global mobile data traffic is expected to continue growing at a compound annual growth rate of 53 percent. With customers using mobile devices more for everyday activities, small businesses must have a website that is not only mobile friendly, but owners can also go that extra step by offering customers a chance to download an app. With a dedicated mobile app, small business owners have greater access to data about customer shopping habits and market preferences. Plus, a mobile app also lets the company control their branding and marketing message.
Consider a consultant
Even the best entrepreneurs can use the occasional word of advice or guidance. Even if business is going well, it never hurts to seek out an expert’s opinion on ways to enhance product offerings or improve customer service. Six Sigma Online highlighted the many benefits to utilizing a business consultant. No matter how thorough a small business owner might be in evaluating daily operations, there’s always going to be something that’s not on his or her radar. With a fresh set of eyes reviewing the company, owners can be surprised by what they haven’t noticed about running the business. For other owners, it might be that they’re trying on particular tactic, when in fact they should be attacking the issue from a different angle. With the right consultant working on the problem, owners can get a solid boost in business.