Another thought experiment: If I had a million dollars, I would…?

It depends.  How is that for a non-answer.  It really does depend though.  It depends on if it was mine personally or for business purposes.  It depends on if it was just a million dollars that was purely discretionary or what I needed to live or operate my business on.  It depends on if I ever have to repay it.  The most interesting seems to be if it was excess.  If someone were to give me one million dollars and say it is mine to do with what I want.  Now, let me consider this from a business standpoint.

I guess I could simply give it away.  Charity would make good headlines.  My employees would appreciate it, I’m sure.  If I gave the same amount to each of my 200 employees, they would each receive $5,000.  That would be pretty generous.

I could save it.  I could put it into the bank for a rainy day and allow everyone to sleep better at night knowing that we had an extra million dollars of cushion.

I could give myself a HUGE bonus.  Pretty sweet for me, but probably not a popular decision with anyone else.

I could invest it in the stock market.  This way it would actually earn a return.  However, it would be dependent upon others to make that happen and totally outside of our business control.  The return would be likely to come, but no guarantees.

I could invest it back into the business.  Maybe hire additional staff that would help grow the revenue or help develop new products.  Maybe buy equipment that would increase efficiency and consequently profitability.   Increased profitability would increase bonus compensation as it is a direct correlation to profit and boost share value.  The return on investment would also be within our control.  Over time, that million dollars becomes worth more than a million dollars.  As an ESOP company, this would benefit everyone at pretty much the same ratio as simply giving it away.  Dividing more than a million dollars by that same 200 employees, would provide more benefit per person than the initial $5,000 I could offer them.

In reality, a combination of these ideas might be most appropriate, but if I were to only choose one, the investment in ourselves is the clear winner.  That is assuming we have ideas that would provide better returns than the general stock market.  I’m pretty sure we do.

Maybe this thought experiments wasn’t that hard after all.  I’ll have to think of a tougher one next time.