If you want your business to continue succeeding, reinvesting some of your profit into your business is something for you to consider…
Starting a new business is tough and it’s going to take a long time before you start making any real profit. You’ll have to cover all of the start up costs and invest in marketing to find your first customers. But even when you’ve got those customers, you’re still not going to be making any profit yet. You’ll still have all of your overheads to pay and it’ll take time before you can break even. Once you’ve reached that stage, any further growth will hopefully lead to your first profits.
A lot of businesses fail before they even get this far so if you’ve managed it, congratulations. Now you’ve got to decide what you’re going to do with those profits. It’s tempting to splash out and treat yourself because you’ve probably been struggling for money for a while. That’s fine, but don’t go overboard. If your business is going to be a success and continue to make profits, you need to reinvest that money into the company and push it forward. These are the most sensible ways to invest your company’s first profits.
Here are the most sensible ways to invest your company’s first profit.Click To Tweet
Invest In New Equipment
Equipment like computers and good phone systems help to improve the customer experience and ensure that you’re offering a service that matches your competitors. But that stuff is also pretty expensive so you might not be able to afford it when you first start out. Now that you’ve got some money coming in, you can start spending a bit more on equipment for the company. Update your computers and security software, consider getting some accounting software to help handle your money and set up a phone menu system to help out your customer service staff. By improving the equipment around the office, you can make life easier for your staff and improve the service for your customers.
Hire New Staff
Staff costs are a big part of your budget and one of the biggest mistakes that new businesses make is taking too many people on at the beginning. If you’ve managed to start making a profit, you probably avoided doing that. But now you’re making some sales, you’re going to need more people to help you manage the increased workload. That’s why it’s important to spend some of your profits on hiring new employees. However, it’s important that you don’t go overboard and double the size of your team as soon as you start making a bit of profit. You need to look at your company and identify where the skill gaps are. Which areas are you struggling in? That’s how to identify where you need more staff and make sure that you’re spending your profits sensibly.
Increase Office Space
Now that you’re bringing in new employees, you’re going to need some new office space to put them all in. Again, you need to be incredibly careful here because if you suddenly decide to move into a giant office, you’re going to burn through all of your profits in no time. It’s a good idea to increase the size of your office space but only as much as you actually need to. Read Finding Startup Office Space | The Complete Guide for more tips on how to find the perfect office space for your company. If you don’t already have an office space at all, you might not need one. You could look into a coworking space instead. These spaces rent out single desks as and when you need them which is a lot cheaper than renting an entire office out all of the time.
Extra Training
Everybody gets training when they first start a new job but that shouldn’t be the end of it. The best companies offer regular training to their employees so they’re constantly improving their skills. This is the easiest way to get the most out of your employees and improve productivity around the office. This is especially important if you’ve used some of your profits to invest in new computers and software because you need to make sure that everybody is up to speed on how to use them. When you’re training, it’s important that you know what you’re trying to achieve before you start. General training isn’t going to do much for your existing employees. Instead, you should ask them whether there are any parts of the job that they are struggling with or anything that they would like clarified. Then you can build a training program that suits their needs and improves their ability to do their job.
Marketing
Just because you’ve found some success and made enough sales to start making a profit, that doesn’t mean you can sit back and relax. If you’re going to keep the ball rolling and continue to bring in a profit, you need to put more money into your marketing. In the early stages of a business, you’re probably relying on things like social media that are fairly cost effective. That’s still a great marketing method and you should still be using it, but now you can start spending a bit more money on other forms of marketing.
Sort Your Website Out
Everybody knows that a good website is essential for any business but when you’re first starting out, an expensive web designer is probably not in your budget. Now you’ve got more money coming in, you should give your website a makeover. Get a professional web design company to look at your current site and see what they can do with it. It’s also worth paying for a website testing company to look at the site before you launch it. Even the smallest usability issues could put people off buying products from you so it’s important that every detail is perfect. A testing company can help you identify any annoying features so you can iron out all of the kinks before the website goes live.
Outsourcing
Outsourcing is a great way to save yourself some money and reduce your workload. You will be able to focus on other areas of the business. Certain departments like accounting or IT are expensive to run for yourself. It’s a lot cheaper if you outsource those areas of the business. You’ll have the benefit of a large team of professionals to handle that department for you but you won’t have to pay all of those salaries. However, you need to be careful when you’re outsourcing. Things like marketing and sales are central to the business and you need to have full control over it. An outside company might not fully understand your product or how to sell it properly so you should handle that stuff yourself.
Save A Cash Buffer
Reinvesting your profits in the business is important but you shouldn’t spend all of the money. Just because things are going well right now, doesn’t mean you’re not going to run into problems in the future. If sales drop off, you might find yourself in a bad situation. You can avoid that and make sure that you can survive until sales pick up again. That’s why you need a good cash buffer for emergencies. Put a chunk of your profits aside into a savings account each month and don’t touch it again. That way, you’ve got reserves to dip into if you find yourself in a bad financial position in the future.
It’s tempting to get carried away and start spending all of your profits on yourself. But the sensible thing to do is invest them in the business.
