What to do with excess cash?

[krymson]

I would say put 75% of it away for an emergency fund use 20% and give back to employees, and the other 5% put away for any emergencies... maybe invest it to a pension fund think about the long term for you and your staff...

[kandykane]

Thank you for the really nice responses. There are definitely some good suggestions in here.

You mention being in an enviable position.. that only came from years of hard work and running the business conservatively.

Now we are ready to put the money to use and grow more!

Commercial real estate is expensive! Pound for pound versus residential.. just seems like you get less for more.

I'd love to find another business to purchase one day. Sort of a scary thought, but an exciting thought too!

[Pss]

If your real estate is important to your operation (eg there are special reasons why it would be hard to move once you get there because of equipment or something) and you are unlikely to grow or expand to need more space, you might consider buying a building. For most people, they can lease a space in a better location, for less money, with more flexibility to grow, then they could if they bought.

If you just need regular office space, consider looking at existing multi tenant office buildings that you could invest in and also move into. But also consider that the best investment may be a property that is unsuitable for your business, but still a good deal. That would be better than overpaying for a place that works for your business but itsnt actually a good investment deal.

[BP Writer]

OP was 2 months ago, but if you are still pondering what to do with excess cash I agree with the options ArcSine mentioned. I would look at any long term liabilities first to either pay them down, which gives you an automatic return, or restructure/renegotiate them while you are in a strong position to do so. As far as purchasing a building, that decision should be made on its own merits -- and I would set the bar high given the fixed nature of real estate, the relative lack of liquidity of RE investment, and the inherent risks (e.g. potential for depreciation).

An acquisition would be something to really consider if it fits with your plans for the business, and of course a suitable candidate exists -- but I tend to be very conservative about such deals and would be on the lookout for a "fire sale" price because very often the acquiring company is too optimistic about the benefits they will gain and wind up overpaying when those benefits don't materialize to the degree originally planned.

I'm curious - do you provide financing to your customers for their equipment purchases?