Funding Web Projects from Reserves

Should financial reserves be used to fund the development of a website instead of from current revenues? The answer lies largely in the strategic value of the project in question.

Financial reserves are the funds that many non-profit organizations literally hold in a reserve. Since they don’t pay out profits to owners or shareholders, bottom line revenue goes into the bank and is typically invested. These reserves may serve different purposes but they have a role in providing financial security, rainy day resources, and in some cases capital for new ventures within the organization. Funding a website project would qualify under the latter.

My grandfather, a serial entrepreneur in his day, said this: “You can borrow money to make money but you should never borrow to pay for the groceries.” Wise advice all around and it definitely applies to funding your website development and operations.

Delving into reserves to create new capacity, to expand your website infrastructure, with the expectation of significant returns over several years is often a good thing to do. Using reserves to pay for staff or one-off projects is almost always not. The decision to invest reserve capital should always have a tremendous focus on creating significant and sustained new value. It should not be used to cover spot costs or very short-term needs.

This is why web strategy is so critical in a large development project: it gives you and your organization the greatest chance of creating significant returns online when reserve funds are in play.

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