How to Invest Your Company’s First Profits
Corporate investing simply investing the profits of your business. Isn’t it a great feeling when you finally break even? It’s a breath of relief and accomplishment. And when do you finally start making a profit? Well, now it feels like it’s time to celebrate!
Unlikely! No small business owner sleeps well at night that first year and hardly anyone pops the cork of a champagne bottle in year two, just because you’re seeing a profit. In fact, if you’re thinking to yourself, “I need to reinvest every last dollar I made!” you’ve got the right idea.
This is a crucial step in the longevity of your business. But the real question is not if, you should invest (you definitely should) but HOW you should invest in the future. In this discussion, we’ll discuss the most important areas that need more funding.
Boost Your Marketing
As you know already, marketing costs an arm and a leg! So consider your first round of profits a gift – one that can go directly to marketing in order to grow your business to the next level.
With an increase in marketing, comes a predictable boost in sales revenue. But be careful not to overestimate profits or think of it as a promised return. Most business owners say that the more you spend, the more complicated the market gets.
You may likely see a decrease in marketing efficiency. Now is the time to conservatively study the efficiency of specific marketing channels, and see where you can afford to invest in new growth.
Expand Your Company – One Bot at a Time!
Before you think about expansion and new hires, think about growing your business in technology. What new hardware could you justify buying, because of promised gains in productivity? Replacing computers? Upgrading a server?
What better software that’s actually developed for your business specifically, rather than relying on general software for a number of small businesses? Time is money and one of the best ways to cut costs is to reduce time waiting for old computers and inefficient software.
New and field-centric software should help to automate your business as much as possible. You will literally shave off minutes a day, then hours a week, and considerable dollars by the end of each month.
Don’t stop at inventory, however. Even billing software, a faster internet service, or a cloud-based system that would allow you to access the program from any location or device.
Before You Expand…Plan!
Create a big picture in your mind and then write it down in your business plan. Research employee morale and retention programs before you hire new employees. What incentive would they have to stay and then progress with your company?
On the subject, please check out our other article on things every start-up owner should know but may sometimes overlook.
Study Your Profit-Loss
Are you just glancing or really understanding a business perspective of your first few years? Besides having a bookkeeper or accountant analyse your finances, you could also look into your own personal investment plan.
An online investment app, like the one offered by SoFi, can help you with short-term and long-term investing, retirement, crypto, stocks, IPOs, and other opportunities.
Learn New Skills
The more skills you learn (and can teach to your staff) the greater your potential market share. Could you offer a new service? Learn a new language? Offer a new product or learn sales and negotiation strategies for your customers and future investors?
Remember, even if you can’t learn it on your own, you can always consult a business coach to teach you these key lessons. Companies like Advisory Excellence can connect you with a business expert who works in a specific field of interest. Why guess when you can speak to someone who’s done it?
Address Your Debt
Naturally, your instinct says to get rid of debt while you still have a profit going. Good idea…except that you have to be smart about it. It’s not all-important that you eliminate your debt as soon as possible.
What matters is the high-interest rate that will keep you in your debt. So consider investing just enough profit to refinance your loan, paying down your debt to a more comfortable level – one that can easily be covered by your monthly cash flow.
Besides, if you can show a lender or creditor that your business is turning over a profit, they are more likely to give you a better refinancing rate. Repairing credit and getting rid of debt is the first step to changing your life – and keeping your business afloat for years on end.