By: Jibran Qureshi Small Business Advice
Strategies to Grow Surplus Cash in your Business
Businesses are usually strapped for cash. However, if you are one of the few cash-rich businesses, you need to think about growing your cash beyond the meagre interest offered by your bank. You need to think about ways you can use the surplus cash to grow your money. Here are 9 things you can do with the extra cash you have in your Business.
1. P2P Lending
If you are looking for higher returns than traditional bank interest rates, websites like Zopa, Funding Circle, and Ratesetter can let you earn up to 7%. However, you need to beware of the risks that come with P2P Lending before parting ways with your cash. Especially with Brexit around the corner. Having a good accountant assess the risks for you and report on the ROI could be one of the ways you could mitigate your risks.
2. Diversification
If you have always wanted to expand your business by diversifying into other ventures, why not loan some cash to another one of your business with good payment terms? Or you can invest in a hobby that you can develop and take to the next level; loan payments could also mean setting good interest terms between businesses, which could mean extra income for the lender. Ask your accountant to help you build a financial model with beneficial payment terms so you can decide between the diversification options.
3. Extract Profits and Invest in EIS/SEIS Schemes
You could also take the extra cash from your business and invest it within an approved SEIS/EIS business. A few good places where you can find businesses to invest under these schemes are Seedrs, Crowdfunding, etc. You get most of your investment back in the form of tax relief. The gains from selling the shares are also exempt from capital gains tax and you also get relief if the business in which you have invested fails. Ask a competitive accountant on how they can help your business become eligible for SEIS/EIS.
4. Invest in Crypto Currencies or ICO’s
If you know a bit about ICO’s or Blockchain currencies you can create an investment portfolio to make some return of these investments, ICO’s can be tricky and very risky. It would be a good idea to do your research before you make any investments and hire a good tax accountant to make sure you are covered for any tax implications from your crypto investments. Learn more cryptocurrencies.
5. Invest in Property
As a business with cash, you can look at financing your own commercial or residential property. You can get out of the vicious rental cycle and purchase your own office, or mortgage a residential property which can be let out to make money.
6. Invest in Growth
Why not use the extra money to grow your business? One way you can do that is by reinvesting the extra money within the business, invest in your company’s marketing strategy by focusing on the digital presence of the business using things like SEO. Search Engine Optimization can help with improving the organic presence of the business online, resulting in long term growth. You can also look at getting some extra clients by doing some paid advertising. Hiring a business development could also mean growing the business faster by having a specialist on board.
7. Pension Pot
Investing in a pension pot can be highly advantageous and can make your savings grow rapidly, as pension contributions also provide tax relief. A pension will basically be your long-term savings plan with tax relief. Generally, you can access the money in your pension pot from the age of 55. You need a competent accountant to help you draw down your pension, make sure you speak to one to plan for an effective tax-efficient drawdown.
8. Invest in Bonds
A bond is like an IOU, it is a fixed instrument that represents a loan given to a bond issuer in return for a commitment by an investor. Bonds are generally less risky than an investment in equity. There are two ways to invest in bonds, the first one being where you invest in a bond until maturity while collecting interest payments on it, the second one being where you profit from selling the bond at a higher price than what you purchased it for.
9. Purchase Businesses
What better way to beat your competitors than to purchase their business. Acquiring your competitors is a quick strategy used by many businesses to beat their competitors and acquire their Intellectual Property. The process itself can be complicated and expensive, however once done you can add immediate growth to your customer base, revenue, and your intellectual property. You will need an accountant, a lawyer and a business broker to help you find, value and purchase a business.
Clear House Accountants are specialist SME tax company in London who have Tax and Business Advisory. Having worked with thousands of businesses we help businesses develop smart solutions for their accounting, tax and business growth needs. If you are looking to grow your business or save money by becoming more effective with tax and accounting, speak to us to see how we can help.
Author Bio
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants, and has over 10 years of experience in practice and across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. It was this dexterity that led him to be Enterprise Nation’s Top 50 Advisors.
Jibran is fueled by his passion for helping businesses. He unequivocally believes that as business advisors and accountants for our clients, it is our responsibility to work with them as business partners. As specialists, it is our duty to help our clients navigate through the complexities of constant change and the implications that come with it.
Over the past decade, innovative disruptions have changed the way businesses work, everything from cloud software, innovative business models, to AI and machine learning, have impacted how businesses operate, grow, and expand.
Jibran recognized the need to manage these disruptions sustainably, early on and shaped Clear House Accountants to not just be compliance specialists, but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
Jibran developed his prime role as the Managing Director to build Clear House’s capabilities so it can add value for their clients. He is of firm belief that this can be done through consistent high-level training, building the right tools, and creating roadmaps to help businesses cope with prospective disruptions. He envisages that every client that comes on board, is provided maximum value through onboarding, ongoing services and the right mix of tools to help them become the best in the world.
You Might Also Want to Read:
1 Key Resource for Building a Strong Business Foundation
How UK Businesses Should Optimize Tax Incentives for Sustainable Growth
How to Start a Business in the UK
