How Entrepreneurs Can Use Their Tax Refund to Grow Their Business
It's tax day (or about to be) and you're wondering what to do with your tax refund check when you get it.
Instead of going on yet another over-priced vacation, you know, the ones with $10 sodas and $20 sandwiches, you want to be smart with your money. You want to know how you can spend your cash wisely, invest back in your business and jump-start your growth.
According to the IRS (great way to start a blog post, huh?) the average tax refund for individuals is around $3000. That's pretty high considering that means you've over-paid the government by three-grand and they haven't even paid you interest.
However, if you're one of the 59 million people looking to get some cash back this tax season, you may be looking for ways to use your refund wisely. When a reader, Maddie, asked for my advice and gave me the idea for this post, my first thought was,
I know nothing about taxes!
But, the more I thought about it, (and the more Maddie encouraged me, thanks Maddie) the more I liked the idea of giving budding and aspiring entrepreneurs a resource to help them use their tax refund to start a business, or help them jump-start their growth.
The more research I did, the more excited I became about entrepreneurship in today's online world. The barrier to starting a business today is almost completely gone. The learning curve is so short, almost anyone can start a side-hustle and begin building a business.
So, to give you, the entrepreneur, a place to get started, I've come up with some of the best ways you can spend your tax money this year. I've broken it down in $500 increments that work like a Kickstarter campaign.
For example, if you have $1000, do everything in the $500 section, plus these. If you have $1500, do everything in the $500 and $1000 sections.
You get the idea.
If Your Tax Refund is $500
First, if your Tax Refund is $500 or less, way to go! That means you've kept your money in your pocket and used it instead of letting the government hold onto it. Great money management. While not getting a big return may suck, you've been putting your money to good use all year.
Second, $500 is all you need to get started with your business. While it may not seem like a lot, with the right knowledge, $500 can go a long way for the savvy online entrepreneur.
By a Domain
A Facebook page, an Etsy page, or a LinkedIn profile won't cut it. You need a place to call your own. I buy all my domains from GoDaddy. They have great prices, but so do many other registrars. Just be sure to buy each of your domains from the same place so you don't have to keep track of them.
$.99 to $14.99 per year and up
A domain is of little use without a place to store your site. Think of your domain like your mailing address that points everyone to your house where everything is stored. You store everything on your host. I use and recommend Bluehost for your hosting needs. I've tried cheaper solutions and they didn't work out.
While I buy my URLs from GoDaddy, many of my clients have expressed frustration with GoDaddy's hosting, so I try to avoid them. Also, don't be enticed by the “free domain with hosting” offers. In the end, you don't own the domain, and migrating the content you own becomes a problem.
$3.95 per month and up ($142 for 3 years up front)
Buy a Professional Theme
Your online presence needs to look good. While Craig's List can get away with looking like an online classified ad, you can't. Your visitors want a sweet-looking site that loads fast and allows them to get what they need.
That's why I use and recommend themes by StudioPress. A theme is the look and feel of your website, like the paint on a car. When I switched over to StudioPress themes I got a boost in speed and better SEO.
$99.95 one time
Buy Better Software
While I love StudioPress, they don't make the best-looking landing pages, sales pages, squeeze pages, etc. But that's ok. To get amazing sales pages, like this one, this one, and this one, I use and recommend OptimizePress. The team over at OptimizePress custom designs pages for us to use on our sites. They're easy to tweak and modify.
Plus, OptimizePress comes with OptimizeMember, the membership plugin I used to create my Membership site. It also allows me to restrict access to non-members. The landing pages as well as the membership component make OptimizePress a must-have.
$97 one time (plus optional $17/mo for new templates)
Notice I don't have WordPress on here anywhere. WordPress is completely free and you can use it any time. There are also thousands of free plugins, many of which I've tried, but I've come to love the tools listed here.
If you've bought the other things listed up to this point, you'll be off to a great start. Take your spouse out to dinner as a thank you for the past year, and an advanced thank you for the time you're about to invest in your business.
If there's money left over, buy some books. A few I recommend are Think and Grow Rich by Napoleon Hill, How to Win Friends and Influence People by Dale Carnegie, The War of Art by Steven Pressfield, and Platform by Michael Hyatt. Listen to this for 12 books that shaped who I am.
I don't believe your business to be the first order of business on your agenda. You are.
– Michael Gerber, The E-Myth Revisited
If Your Tax Refund is $1000
Attend a Conference
For the money, conferences are great investments. You meet new people, learn new things, and even discover that living a life outside of cubicle-nation is possible.
Here are some recommendations:
Even if you're not a podcaster, this is a wonderful conference for entrepreneurs. Podcasting as a marketing tool can grow your business like you never thought possible.
$200 + per ticket, per event
I'll never forget my first NMX. I met life-long friends and found a place I could be myself. Had I not gone to NMX 2014, I likely wouldn't be writing you this today. A great even held in Las Vegas.
$200 + per ticket, per event
Though I've never been myself, I hear great things about Chris Guillebeau's conference in Portland Oregon. Chris wrote the $100 startup and leveraged that into a successful conference. It's on my to-attend list!
$400 + per ticket, per event
Hosted by Social Media Examiner, Michael Stelzner's conference is always a favorite of online entrepreneurs. Though more expensive than some of the alternatives, there's usually a cool event held on an aircraft carrier to drive the wow-factor in San Diego.
$797 + per ticket, per event
Of course you'll have to budget for travel and expenses, but that's not fun to write about.
Join a Mastermind
If you already have a website and you're already moving with your online business, I recommend investing in a mastermind. I attribute much of my success and may of my blog and product ideas to my mastermind groups. Every successful person in history has had a group of people to keep them accountable and provide support, and you should too.
Free to $197 per month
Pay off Debt
If your $1000 could pay off your debt, do that. Debt sucks the life out of you and your business.
Analyze the record of any man who has accumulated a great fortune, and many of those who have accumulated modest fortunes, and you will find that they have either consciously or unconsciously employed the mastermind principle.
– Napoleon Hill, Think and Grow Rich
If Your Tax Refund is $1500
If you've done the other things listed, it's time to make some upgrades and investments. Once you have the basics out-of-the-way, it's time to go pro.
Every video I edit, I edit with Camtasia. The call-outs, zoom ins, arrows and overlaid text all come from this software. It's a bit of a resource hog sometimes, but it's worth it if you want to teach or train online.
$199 one time
Per the request of my clients, I record every mastermind and coaching call. Zoom makes it easy with the click of a single button. They also provide a dial-in phone number for people who want to call in while on the road. Zoom also allows for screen sharing and holds up to 25 people; Google Hangouts is limited to 10.
Free, $9.99 + per month
If you want to invest in recurring fee products and services, here are a few I recommend.
If you have a growing email list, and want to drip content to the people who sign up, you need to take a look at GetResponse. After months of research, they're my preferred email marketing service provider.
$15 + per month
Join a Membership
Community is everything online. We want to be around like-minded people so we can learn from them, and, in turn, share what we know.
$34 per month (both my membership & Fizzle.co)
Make scheduling easy with an online service that syncs with you Google Calendar. Eliminate the scheduling back and forth that wastes hours every week, and use Calendly to only show time slots when you're available.
$10 per month or $96 per year
Of course, these are each a la carte items. If you've invested in the other things on this list, $1000 to about $2000 is a gray area. You can always add to and accessorize what you have, or make tiny upgrades along the way.
But, when you get about the $2000 mark and really want to double-down and go all-in on your business, things can get interesting.
If Your Tax Refund is $2000 or More
Let's assume that you already have a website. Your domain is descriptive, your hosting is set up, you've started your podcast and you've joined a mastermind.
If you've got each of those things in order – you've already booked a ticket to your next conference and stocked your bookshelves – we're left with the high-dollar items.
There are few tools you'll use more than your computer. The item you will use more often is listed below. If your computer is more than four years old, you'll be blown away by the new technology.
Whether you're a Mac or a PC person, the hardware is identical under the hood. Here's what you want to buy; the more power you can afford today, the better.
- Processor: Core i5 or i7 (quad-core would be best)
- Memory: 6 GB (absolute minimum) 8 GB or 12/16 GB best
- Hard Drive (HDD): 128 GB (minimum) 256 GB better, anything more is unnecessary
Everything outside of that is merely details. You can save money on a CD/DVD/BD drive by getting a $50 USB add-on. You can save on a graphics card unless you plan on gaming.
Key points to look out for when buying a computer: weight and speed. Those two things can't be upgraded or updated with accessories six months down the road. The faster and lighter, the better. Buy as fast and as light as you can afford. 1080p or Retina resolutions are also recommended.
Here are some options I'd recommend:
Dell XPS 13 and 15, Precision M3800*
Or, if you prefer to buy from Amazon.
Apple MacBook Pro 13 and 15-inch
*Full disclosure, I worked for Dell from 2009 to 2014. Even though I don't work there any longer, I'd still recommend their products over most competitors due to their quality; the XPS and Precision product lines specifically.
Your business will revolve around what you can do on your computer. Everything from web design to photo editing, video capture to podcast production, will happen on your computer. Don't skimp on specs to save a couple hundred bucks on something you're going to use almost every day for several years.
New Cell Phone
A couple of years ago I worked with a guy named Dale who insisted on keeping his phone for as long as possible. He was toting around a several-year-old iPhone, old enough that new apps wouldn't even run on it.
When I asked him why he didn't buy a new one he said something to the effect of, “this one still works.”
While that was technically true, I wondered how much time he lost waiting for his phone to load apps and webpages. I wonder how much productivity went down the drain because his old phone couldn't keep up with his new lifestyle.
I don't know how many times my phone is more than ten feet from me. It's sad (maybe), but it's the truth. I can manage a good deal of my business from my phone, and I'm sure you can too.
Every successful person has a coach. Bill Gates said,
Everyone needs a coach. It doesn't matter whether you're a basketball player, a tennis player, a gymnast, or a bridge player. We all need people who give us feedback; that's how we improve.
Eric Schmidt, the CEO of Google said this about coaching,
Every famous athlete, every famous performer has somebody who's a coach. Somebody who can watch what they're doing… and give them perspective.
Coaching isn't for the sick, it's for the successful. When you're first starting out, the best thing you can do is find a guide to help you along the way and keep you focused. Alternatively, the worst thing you can do is try to figure it out on your own, get frustrated, and quit.
I've helped entrepreneurs, attorneys, pharmaceutical sales reps, fitness pros, stay-at-home moms (and dads), ex-law enforcement officers, and non-profit organizations, and I'd love to help you too. Check out my coaching page!
$897 per month or more
There are 17 of the best ways I can think of for you to use your tax refund to start or grow your business. My life has changed so dramatically of the past few years, that I couldn't imagine living any other way.
As I'm writing this, I'm enjoying a cool Austin afternoon, sitting on my porch and listening to the birds. I was able to give my wife a hug and kiss when she got home, and I love my business.
Question: What are you going to do with your tax refund?