If you’ve managed to secure funding for your small business, you deserve a lot of credit. But a cash influx such as a small business loan can feel like both an incredible opportunity and an overwhelming responsibility. After all, these funds are more than just a financial boost. They’re also a vote of confidence in your vision and ability to deliver from your lender.

All told, it is best to use your investment funds wisely by focusing on growth, tracking results and sticking to what works for your business. After all, smart spending leads to sustainable success. And there is plenty more you can do to make the best use out of your funding. We take a look at 12 smart strategies to handle your investment cash from a small business perspective.

1. Invest in growth that scales

Your investors are looking for results, and that means scaling your business in ways that multiply returns over time. Think about growth strategies that don’t just bring in more revenue but also make your business more efficient.

Consider:

• Carefully and strategically launching into a new market that aligns with your existing strengths
• Adopt proven, existing tech solutions that can help you scale and improve productivity
• Doubling down on your best-performing methods to get new customers

There are many ways to expand your business, but these time-tested methods will help ensure your best chances of long-term, sustainable growth over time. And while every business strategy carries some risk, these methods are smart and sensible ways to bolster your bottom line.

2. Boost cash flow when you need it

You can use investment funds to support cash flow, but it should be done strategically and with clear boundaries. These funds are great for tackling growth-related challenges, like covering upfront costs for inventory, scaling operations or bridging the gap when you’re waiting for payments to come in. But you should make sure you’re not using them to cover everyday expenses unless it’s part of a bigger plan to make your business more successful in the long run.

5 ways to maximize small business cash flow

Cash flow is the lifeblood of a small business. It ensures the company has enough money on hand to cover daily operations, pay expenses and invest in growth opportunities. You can leverage common practices used to maximize cash flow including:

• Streamline invoicing and payments: Using automated tools to send invoices promptly and offering multiple payment options to speed up collections.
• Negotiate better terms with suppliers: Requesting extended payment terms to align outgoing expenses with incoming revenue.
• Reduce unnecessary expenses: Auditing your spending regularly to identify and cut non-essential costs.
• Optimize inventory management: Avoiding overstocking or understocking by tracking inventory levels and sales trends.
• Focus on recurring revenue: Introducing subscription services or maintenance plans to create a steady cash flow.

3. Hire the right people

A solid team can make or break your business. That’s why it’s best to use your investment dollars to bring in talent that complements your skill set. Whether it’s a seasoned CFO to manage finances or a savvy marketer to build your brand, the right hires are worth every penny.

And it’s not just about hiring. High turnover rates can cost your company valuable time and money. Invest in your current team by offering training, leadership opportunities or benefits that motivate them. A happy, well-supported team will go above and beyond for your business.

4. Upgrade your tech infrastructure

If you still rely on clunky spreadsheets or outdated tools, you’re needlessly hampering your business. The right technological investments can save you time, money and a whole lot of stress. Consider using your investment funds for:

• Automation software: Automation platforms like Zapier and HubSpot can help you handle repetitive tasks such as sending follow-up emails and updating customer records
• Customer relationship management (CRM) platforms: CRM tools such as Salesforce, Zoho CRM and Pipedrive can help users manage sales records, track customer interaction histories and better handle clients over every stage of the sales process.
• Analytic tools: There is a wide range of analytic platforms on the market such like Google Analytics that help you gain insights into customer behavior, market trends, business performance and more.

5. Focus on the customers you already have

Getting new customers is important, but keeping the ones you already have is a highly effective way to grow your bottom line. Use your investment funds to create an experience that makes people stick around. Customer retention is the cornerstone of any successful small business, and using your capital to engage your existing customers is a wise strategy.

Some ideas include:

• Launching a loyalty program that gives customers discounts, free items and other perks.
• Upgrading your customer support system to include live chat, text messaging and other convenient channels your customers use every day.
• Asking for feedback through platforms Google Forms, Typeform or SurveyMonkey.

6. Keep track of your spending

Investors love transparency, so showing them exactly how their money is helping your business grow builds trust and helps ensure the best relationship between you and your lenders. Tools like QuickBooks, Xero and other accounting software can help you keep your business finances organized, while holding yourself to financial key performance indicators (KPIs) ensure you get results from every dollar spent.

7. Save a little for the big picture

Even the most competently run businesses can suffer due to unforeseen circumstances, whether that’s larger socioeconomic factors or sudden changes in your specific industry. This is why it is important to set aside some of your investment funds for strategic reserves if you are able to. This might mean having cash ready to:

• Buying out a competitor who’s suddenly on the market.
• Investing in a piece of equipment that will improve your business in some tangible way.
• Using strategic reserves of capital to pay your employees if business is slow.

Having this type of flexibility can be crucial in trying times.

8. Plan for the next funding round

If you’re planning to raise more funds in the future, it’s helpful to start laying the groundwork as soon as possible. In order to set yourself up for success in the future, it can be helpful to set the following goals for yourself:

• Increasing revenue by a specific percentage or profitability
• Expanding your market share
• Building a stronger pitch deck with updated metrics

By showing you’ve managed your current funds well, you make attracting future investment easier.

9. Test before you scale

When scaling up, it is wise to start small before committing large portions of your capital to a new investment. For example, you can run pilot programs or A/B tests new campaigns to see what works. If you are releasing a new product, test it with a select group of customers or launch a targeted ad campaign in one region to see how it performs in the market. Even the largest brands in the world use this strategy as a low-risk way to make smarter, more confident moves with investment cash.

10. Reinvest in what’s already working

One of the easiest ways to handle investment cash is to double down on what’s already bringing in results. Whether it’s a marketing campaign driving sales or a product that’s performing exceptionally well, reinvesting in proven strategies can amplify your success. In many cases, sticking with what works is your smartest move.

11. Plan for tax obligations

Don’t forget that investment funds may come with tax implications. Work with a tax professional to understand how the funds impact your business’s tax liability and set aside enough to cover what you owe.

Consider using a portion of the funds to optimize your tax strategy. For instance, you could take advantage of deductions for equipment purchases or research and development expenses.

Staying ahead of your tax responsibilities helps to keep you compliant and protects your cash flow and credibility with investors.

12. Strengthen your brand

Outside funding can help you build a brand that stands out in a crowded market. It can be extremely effective to use the money to refine your messaging, improve your visual identity or launch a PR campaign to increase visibility. Consider investing in professional design services, branding workshops or content creation to ensure your business communicates its value effectively.

You’ll want to show your investors how branding initiatives will lead to revenue growth, customer acquisition or improved market positioning. For instance, rebranding might help attract a new target audience or improve conversion rates on marketing campaigns.

Back up your branding investment with data. For example, share insights from market research or customer feedback showing the need for better messaging or stronger brand recognition. Additionally, a key area to monitor when investing in brand marketing is how it translates with customer acquisition costs, or CAC. This and other metrics can go a long way in ensuring the success of your campaigns.

Be clear on what your investors want

We’ve offered some possibilities on how to best use your investment cash. But before you start writing checks, take a moment to understand your investors’ expectations. Are they hoping you’ll expand into a new market quickly? Do they expect profitability within a certain timeframe? Or are they focused on growth metrics like customer acquisition? Being unclear on these expectations can create a lot of confusion and resentment on both parties.

Knowing what they want can help guide how you handle investment cash in your small business. Start by having an open dialogue with your investors about their goals. This builds trust and guarantees you’re on the same page from day one.

How to get funding for your small business

If you’re at an earlier stage of your business journey, you might be wondering how to get funding for your business in the first place. There are plenty of options, whether you’re looking for something traditional or something more niche. Here are some ideas to get the ball rolling:

Tried-and-true funding sources

• Angel investors: Got a big idea with even bigger potential? Angel investors could be your champions, trading their money for equity or convertible debt.
• Venture capital firms: If your business is all about fast growth and scaling, venture capital firms might be the ticket. But be ready to give up some control in exchange for those funds.
• Equity crowdfunding: Platforms like StartEngine or Republic let you pitch your idea to everyday investors in exchange for a slice of equity. It’s like crowdsourcing, but it’s ownership in your company instead of products and perks.
• Friends and family: Start with people who know and trust you. Just be sure to put everything in writing to avoid awkward Thanksgiving dinners.
• Small business loans: Loans from dedicated lenders and traditional financial institutions can offer fast funding at reasonable interest rates. While you’ll have to meet certain qualifications to receive a loan, these companies have dedicated staff to guide you through the process.
• SBA Loans: Loans from the Small Business Administration (SBA) carry very favorable loan terms for smaller organizations that need an injection of capital. However, applications for these loans have a very high failure rate, so it’s not a gauranteed way to secure funding. With that in mind, you can easily reapply for an SBA loan should you fail on your first try.

Creative funding ideas

• Accelerator programs: Programs like Y Combinator or Techstars offer funding, mentorship and connections with investors all in one package.
• Corporate investors: Big companies in your industry might invest if your business complements their offerings. It’s a win-win.
• Pitch competitions: Ever dreamed of a Shark Tank moment? Regional contests and startup events can help you secure funding and earn some serious buzz.
• Online networking: Join industry groups, share your story and connect with investors who might be scrolling for their next big opportunity on LinkedIn.

Whatever route you choose, make your pitch airtight and your growth story compelling. Investment funding is about showing people why your business is worth betting on.

Next steps

You want to make every dollar count when handling investment funds. Now that you understand the strategies, your next step is to evaluate your business plan. Identify areas where you can apply these approaches and create a business roadmap that aligns with your goals and your investors’ expectations.

If managing investment funds feels overwhelming, don’t hesitate to seek expert help. A financial advisor or fractional CFO can work with you to create a strategic plan, allocate funds effectively and track progress. A fractional CFO works with you on a part-time, contract or project basis. Professional advice can save you time, stress and guesswork.