President Trump just signed The Emergency Coronavirus Relief Act (ECRA), which, among many other things, makes Paycheck Protection Program (PPP) money that was previously expected to be taxable, now tax-free. I'm no accountant, but it seems to me that if you had been (rightly) saving some of your PPP money to pay taxes, you now have all of that money available for your business: A true Christmas miracle for small business owners and entrepreneurs!
Now, there are two types of entrepreneurs. There are those who like to put money away to save for a rainy day, and there are those who like to invest that money in growth and go for it.
If you are in the first category, I totally understand, appreciate, and respect your position. After all, if 2020 has taught us anything, it's taught us that rainy days can and will happen!
If, on the other hand, you are in the second category, then finding out that your PPP money is tax free may be an opportunity unlike anything you've ever experienced: an opportunity you cannot pass up. Fortune favors the bold, and now is an incredible time to invest in your business.
Here are three possible ways to use your PPP money to invest in your business's growth going into 2021 and reach the potential you have been seeking:
Hire salespeople: If you have a great business, but lack strong salespeople to sell that business, you will not succeed. Investing in salespeople is one of the fundamental ways to grow your business as sales plays a key role in the expansion of any company. While investing in more salespeople may seem like a risky expense, it is often work the risk, as they quikcly pay for themselves. One way to get the most bang for your buck is utilizing college students, who are less expensive to hire and present a unique perspective.
Spend more on marketing: You can attribute more funds to advertising, or spend more on marketing staff. Increasing advertising will lead to more awareness of your company and the product you offer, allowing consumers to either learn about your product for the first time, be reminded of it, or most importantly be persuaded to purchase it. Another option is to spend more money on marketing personnel, who provide a big help to your business and in reality do not have to add a large expense.
Bring in senior talent: While allocating more money to senior talent can be expensive, it is often a really great investment. Experienced professionals can help you with strategy and long term thinking, and can sometimes be that difference maker in the growth and success of your business. What might that one key insight be worth to you?
During a year full of uncertainty, it's time to take initiative on the things you can control. With the new stimulus bill allowing your PPP money to be tax-free, the time is now to decide if you want to play it safe or take a chance to invest in your company's future.