As soon as your business starts generating a profit, it is time to put those profits to work through reinvestment. You might be tempted to hang onto those first profits yourself, but this is one of the most critical times to start putting that money back into your company. Spending profits strategically will help you increase your bottom line. Below are some of the best ways you can reinvest business profits.
More Sustainable Fleet
If you have a business fleet, this is the time to focus on it, especially if it has been some time since you last upgraded it. Making it more sustainable can help your company be greener overall. Investing in more sustainable transportation will help you reduce overall greenhouse emissions, and it also reduces fleet operating costs.
Investing in better technology can make tasks more efficient so your time can be used in other areas. By having the right software, it can help you streamline everything from human resources to project management to customer relations. If you haven’t already, do a time audit where you keep track of exactly where you are spending your time each day. This helps you figure out the most repetitive or time-consuming ones so you can streamline those first.
Education for Yourself or Other Employees
Entrepreneurs are naturally learners, and you have likely had to learn new things to keep the business going. You could consider taking some of your profits and using them for seminars, courses, or other continuing education that can help you develop your skills. Of course, your employees can also benefit from continuing education that can help them do their jobs better.
While industries such as the legal and medical fields are known for requiring continuing education, those aren’t the only ones that can benefit. There are plenty of courses for every area of focus. Check with your local community college, as many have resources for business owners. There are also plenty of online courses that offer flexibility for busy entrepreneurs and can be completed at your own pace.
You have likely heard about emergency funds when talking about personal finance, but it’s equally important to have an emergency fund for your business. If things get tight, you don’t want to have to close operations. Consider having at least a couple of months of expenses. Take some time to list out all your expenses, including supplies, payroll, rent, utilities, and other costs.
Even this amount could be the difference between closing down and getting through a rough patch. If you depend on a few major customers, losing one of them could be devastating if you don’t find another large account quickly. During the pandemic, many small businesses had to close permanently for this very reason.
Invest in Employees
When you are doing well, take some time to consider whether it would be beneficial to add another employee to your team. The good times are also a chance to thank current employees who have helped you get where you are today. It is challenging to determine whether to hire an additional team member.
Take a bit of time to play with the numbers to figure out what this might look like for your budget. See how your business might do over time if you were to hire a new employee. If you think things will get better from here, this could be a good time to add a new team member.
Make sure you thank the employees you currently have too. This can keep them satisfied in their jobs, ensuring they are as effective as possible. When employees are happy in their work, they are less likely to leave. Hiring another employee uses far more resources than keeping the employees you currently have in-house.
If an employee leaves, it can also take several months for a new one to get up to speed, and in the meantime, the reduced efficiency can harm your profit margin. Consider giving current employees a bonus or raise. If you need a manager, consider promoting someone currently on the team, rather than bringing in someone new from the outside. Look over your current benefits packages to see if you can add anything else.