Spending versus Investing - by Ravi Patel

 

Entrepreneurs watch, as they should, their cash outflows very carefully. But, do they realize if they are spending or investing their money?

 

Spending money involves payments for costs of goods and services (such as inventory, supplies, labor, travel), compliance requirements (taxes, fees, licenses), or overhead (rent, utilities, office expenses). These provide short-term benefits.

 

Other forms of payments or outflows have returns over a period. These are usually for marketing, hiring, training, improvements, real estate, machinery and equipment, and such.

 

Differentiating between spending and investing is useful for decision-making. Controlling spending and investing wisely offers the optimum path for Entrepreneurs.

 

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