So you’ve managed to achieve every young upstart’s dream: you’ve created something people truly want. Venture capitalists and investors are clamoring for your attention, your profit margin makes your competitors want to cry, and suddenly you find yourselves flush with success and cash. What do you do?
You’ve probably been dreaming of buying a vast swath of trendy office space – something big enough to accommodate foosball and air hockey tables – and re-fitting your operation with up to the minute tech. You’re likely looking forward to being able to afford the fancy and individually printed business cards and paying to join a few of your industry’s most exclusive organizations.
Try to resist this urge. After all, sure you’re a superstar right now, but what about next month or next year? The world moves fast and consumers’ attention spans are short. Instead, make some modest investments.
Work Space.
For example, now is a great time to move out of your basement and into real and actual office space. You don’t have to bargain basement or strip-mall this. In fact, it is a good idea to situate your company in a good space that lends to your legitimacy. For example, a small suite in a high-rise downtown is a great move. You might also consider leasing offices in other independent and entrepreneurial spaces, like this one in Portland (look for something similar where you are). This helps you expand and it pays forward some of your success to others in your local independent and entrepreneurial communities.
Showing Appreciation.
Next, you will want to thank every person who has helped you get your company up and running. It is okay to take some of your profits to throw a party for your friends, family, and investors. This is a good time not just to say “thank you” but to show everyone exactly how you will be putting your current windfall to work. It will be tempting to host this event in your new offices, but save the tour for later, when everything is setup properly. Instead, look for event spaces that are set up to accommodate parties and presentations simultaneously. For example, NOAH’s event venue rental company specializes in fully equipped and multi-faceted spaces.
Why is “fully equipped” important? Because, unless you plan on hosting a bunch of events, you do not want to have to buy (and find space to store) your own A/V equipment, serving materials, etc. If you find that you host a lot of these types of events, investing in your own equipment might be a good idea but wait until that is a reality and not just a plan.
Hiring Help.
You’ve likely already hired at least a couple of people to help you get your company up and running well. These people deserve a raise–nothing extravagant (we’ll get to why in a sec), but enough to make a difference for them.
You will also probably want to expand your employee pool by at least a few people. The best way to do this is to have a company-wide meeting to figure out where your gaps in experience are, who needs help with what, etc. Fill these gaps and find people to supply this help.
About interns: it can be tempting to try to cut expenses by hiring unpaid interns to do the “grunt work.” Make sure you are following the letter of the law and not just trying to get free employees.
Saving and Investing.
You want your money to make its own money. That’s just good finance. Still, do not just chuck whatever is left of your investment capital into the stock market and hope for the best. First, put at least half of it into the bank (in an account with highest yielding interest rate possible). This will be your “cushion” if sales wane or you go through a dry spell–something even the most successful enterprises’ experience from time to time. Then, set aside at least a year’s worth of payroll and benefits funding for your employees and to cover your bills like lease payments, utilities, etc. And then, if you have anything left over, it’s time to start investing.
Paying It Forward.
One of the best investments you can make is in another up and coming startup or entrepreneur. Paying forward your good fortune doesn’t just set up your own company for a potential influx of funds later (depending on the type of investment you make), it’s great for your and your business’s reputations.
All of this probably sounds a little bit boring compared to what you’ve been dreaming of doing when you “hit it big.” Trust us, though: the goal is long term success. The best way to do that is to use your investment funding wisely.
