Through hard work and savvy marketing, you will eventually start to make a profit in your business. You will then be faced with that all-important question: What do I do with the money?
The first thing you need to do is put some of your profits into your savings or emergency fund. This is common sense and should be good practice for all business owners. The second thing you should do is consider ways to spend some of the extra funds you have acquired.
How to Spend Your Business Profits
However, care needs to be taken. If you spend your money unwisely, you may damage your business. Buying equipment that is surplus to requirements, for example, or casually wasting money on anything that won’t profit the business, are both no-nos. Instead, consider the following (sensible) ways to spend your profits.
Pay off any debts
Many businesses get into debt when trying to raise capital. This is normal, but to allow your business more financial freedom, it is in your best interest to pay off whatever debt your small business loan or credit card acquired. Do the same with any friend or family member who may have also loaned you money at the outset.
Outsource areas of your business
You may be able to manage most of your tasks in-house, but if you have the extra cash to spend, it makes sense to outsource to those firms which could benefit your business, even if you only use their services for a short time. Using something akin to this best answering service for lawyers, for example, or a web design team to manage your website, are just two examples of places where your money won’t be wasted.
Reward your employees
Should you have employees working for you, then share your profits with the people who helped you acquire them in the first place. You might want to give them a cash bonus, for example, or you could take them out for a meal as a way of showing your thanks.
You might also put some of the money into improving their workstations or break rooms. A happy employee is a productive employee, so don’t neglect them.
Pay some of your tax bill
Don’t wait until last minute to pay off your taxes. This is one of those expenses that is an unnecessary evil; you have to pay it, even though you don’t see the rewards of your payments.
While you have profits to spend, pay off a portion of your tax bill early, as this will lessen the strain on your bank account later on when the taxman comes knocking at your door.
Invest your money
Using only a portion of your profits, consider investing in another business or on the stock market, as you may see a sizeable return as a result. Provided you do your research beforehand; this is one way to escalate your bank funds and give you the means to grow your business at a faster rate.
It’s a good day when the profits start rolling in, but you should be wise in the way you handle them. Consider our advice, and if you have any tips of your own, then be sure to share them with us. Take care, and thanks for reading.