How You Can Avoid Wasting Your Money at the End of the Year
Due to conservative spending throughout the year, your business could be left with money that is considered taxable profit at year-end. In order to reduce your tax burden, you could choose to spend that “left over” money. Many tax experts advise against simply spending money to lower a tax burden, as 1 dollar spent only saves .40 cents in taxes. But there is a way to minimize taxes without wasting your money; you can invest that money in growth opportunities that generate at least .60 cents of value per dollar spent.
This means avoiding frivolous spending; no extra office supplies or unnecessary luxury items that won’t add concrete value to your business. Instead, engage in business opportunities that will yield future business gains. For instance, your company could buy a new machine that would improve your output or you could invest in growing your brand.
“This means avoiding frivolous spending”
Investing in your brand may be a less tangible option, but it may prove to be the more fiscally satisfying one. It may also be the only good option if your company’s product is not physical. How can something so abstract be the better investment? According to Stanford Graduate School of Business Professor V. "Seenu" Srinivasan, “A brand's ‘image' provides a stronger incentive for buying even than the perception that it is a better product."
Thus, a brand is only as good as it’s perceived to be.
Therefore, money invested in updating your brand’s image or strategy may go a long way in terms of future profits and growth. In a very real sense, this is the difference between attaining top of mind awareness or being overlooked on the shelf (or in the app store).
Just as throwing away money simply for the sake of paying less in taxes is ill advised, so is not being strategic about brand investments. Depending on the specific company, there are many areas where branding could be improved to gain market share and to increase brand awareness. Finding these areas and shoring them up will give you the best ROI.
Many companies pay taxes according to the calendar year. If your company is one of those, the window is closing for spending what is leftover in the budget. Carefully consider what your company could improve or consult an outside expert to utilize the entire value of your excess cash and thus grow your company.
Are you thinking about investing in your brand for 2017 and beyond?