To reduce the risk of failure and ensure the success of your diesel repair shop, you must take measures to continually increase the net worth of your business. This requires reinvesting time and money into the people and processes that run your repair shop in order to achieve the best return on your investment and grow the business.
People want to work for a successful, wealthy company. If your repair shop is successful, you will attract more talented employees with better ideas and methods, giving you a large advantage over your competition.
As a diesel repair shop owner, your shop is probably your biggest and best investment. By continuously reinvesting in your repair shop, you will increase your profit, cash flow and net worth over time. For example, investing in existing processes or creating new ones, such as marketing, will generate more sales revenue. Investing in shop efficiency methods will improve job cycle times, increasing profits. By reinvesting your income into your assets, you create more profit, more cash, and increase your net worth.
Why Reinvesting in Your Repair Shop is the Best Option for You
Many small business owners typically believe they should invest their profits in conventional manners, like the stocks or real estate. Although these methods have proven to be profitable, by generating a positive return on investment over time, they both have significant, uncontrollable risks involved with them. Reinvesting in your repair shop can become a lower-risk way of balancing your portfolio to both long and short-term investing.
Investing in the stock market requires the luxury of time for your money to grow substantially enough to make it worthwhile. For example, if you are 30 years away from retirement, the money you invest in the stock market or mutual funds has the luxury of time. Your level of risk is reduced with short-term, negative fluctuations in the market because you have the comfort of knowing that eventually the market will come back up.
However, if you are nearing your retirement age and are fortunate enough to be the owner of a successful diesel repair shop, it is more lucrative of an investment for you to put some of the money back into your business so that it will grow the net worth of the company and increase the assets, thus increasing your share of the profits and building your net worth at a much faster rate. If you take money out of your company and invest it in the stock market when you are nearing your retirement age, you may be negatively affected by short-term fluctuations in the market. For example, if you continue to invest the bulk of your money into the stock market, you are more likely to experience a loss on that investment because you may have a sudden need for the money and therefore may be forced to sell stocks that are below what they were valued when you purchased them.
Investing in real estate is another conventional investment practice that may be a better fit for someone that has time for their investment to increase in value. One of the downfalls of tying up your investment dollars with real estate is that it is not a liquid asset. For example, if you own a piece of property that is worth $500,000, this is not money you can readily access when needed. You would have to find someone to buy the property at the price you list it for, in a time frame that is convenient for you in order to make the investment worthwhile. If you are in a hurry to sell the property because you need cash, you may not receive the full amount of what the property is worth and will possibly be taking a loss on the original investment. When you have finally sold the real estate, not only might you have incurred a loss, but you will also have to pay taxes on the money you earn from doing so. Of course, you could borrow against the equity, but how much debt do you really want to incur as you get older? Real estate investment, like stocks, is a long-term play.
When you reinvest some of your money back into your repair shop, you will turn a quicker profit and grow your business. Ensuring the continued success and growth of your company into the future will benefit you in ways that other investments cannot. Reinvestment can generate much larger returns, which will then create more money for you and more money to reinvest back into the business, again. If done correctly, this is an on-going process that improves with every fiscal year. Reinvesting is less risky than other investment options and you suffer fewer penalties on the money that you receive in-hand from the investment. Unlike other investments, when you reinvest in your repair shop you have some control over how that money is used to benefit both yourself, your employees and your company’s future.
Over time you can diversify business ownership, real estate and stocks to create a more balanced portfolio.
Reinvesting in your repair shop to make it more successful will also help to better the futures of your children and grandchildren - allowing them the fortune of inheriting a successful business that will provide the kind of future that you have worked so hard to give them.