Home » Business, Headline

8 Ways To Spend Your First Business Profits

21 February 2018 No Comment

When you start your own business it’s going to be quite a while before you actually start making a profit. You’ve got all of the startup costs to cover and that’s going to leave you in quite a bit of debt. It’s exciting when your first sales start coming in but all of that money is going to go into breaking even, if you can even survive for that long. Once you’re over that hurdle and you’re breaking even, you’ll finally start making a profit. It’s a common tradition for businesses to frame the first dollar that they make but hopefully, you’ll be making more than just the one. When you get to that stage you need to start thinking about how you’re going to spend that money. You could always take it out and start paying yourself a higher salary but that’s not the most sensible thing to do. If you want to see growth you need to put that money right back into the company. A lot of business owners are a little disappointed by this because they were hoping to start making more money for themselves but that comes later. When you’ve started making a profit, here are some of the best ways to reinvest in your company.

Increase Salaries

While increasing your own salary isn’t the best thing to do, it might be worth paying your employees a little more. The reason that you’ve got to this point in the first place is that you’ve got a hardworking, dedicated team. Your employees won’t continue to work hard if they don’t feel they’re being rewarded for their efforts. You don’t need to increase their salary by a huge amount, even paying them a little bit more is a gesture that will bolster their spirits.

Hire More People

Having good employees is the key to growth and if you’re trying to expand, you’ll need more people to help carry the workload. When you’re bringing in some more money you could use it as an opportunity to hire some new employees. Finding somebody new in the marketing department is always a good idea because you’ll have to increase your efforts to take things to the next level. Just remember that you need to be careful not to overstretch yourself, don’t go overboard and hire 5 new employees, just think about bringing one or two more people on board.

Marketing

The best way to capitalize on your success is to improve your marketing efforts but that’s going to cost you a lot of money. When you’re trying to pay off debts and struggling to break even that’s not an option but now you’ve got that surplus cash you can afford to do it. It’s likely that you’re dealing with your own social media marketing in the early stages of your business because it’s cheaper. But now you’ve got the money to do it, think about paying a professional to do it. You could also consider some of the more expensive forms of marketing that were out of your reach before like TV or radio advertising. By reinvesting the money you’ve made from your first couple of sales in an increased marketing effort, you can keep up that momentum and hopefully, things will start to snowball.

New Website

Your website is the most important marketing tool that you have but it’s also pretty expensive to build one. When you’re first starting out you won’t be able to afford a flashy website with loads of features. Your current website was fine to begin with but now you’re starting to find a bit more success, you need to up your game. Find a web development company and get them to build you a new site that looks more professional and is easier to use. If you’re selling products online this is especially important. One of the worst things for online retail is a site that is difficult to use. Cart abandonment rates are at an all time high because customers are easily turned off and the smallest inconvenience can cause them to leave. When you’re not making that much money you can’t always afford to create a streamlined payment process but now you’ve got the cash to do it, you should update your checkout system. You can also improve the way that you display products on the site with embedded videos and pictures that will also help increase sales.

Extra Training

One of the biggest mistakes that bosses make is training their staff once when they first start at the company and leave it at that. As your business develops and processes change, you need to make sure that your employees are up to date, otherwise, you’ll have a lot of efficiency problems. Having regular training is the best way to develop your team and get the most out of them. Now that you’ve got the money to do it, consider having refresher training to maintain standards. You can also use the money to build training infrastructure like a messaging service so employees can ask any questions in real time.

Improve Infrastructure

A small team with a couple of laptops is fine for a business that’s just starting out but if you’re going to expand, you’re going to need to improve your infrastructure. If you’re trying to run a large business with the equipment of a small one, everything will run at a snail’s pace. When you’ve got the money to invest in the company you should spend some of it on new computers and other equipment. It’s also worth updating your operating systems as well so you can keep up with new software etc. If you’re using outdated software you won’t be able to offer the same service that your competitors can so it’s important that you stay relevant. Updating the office a little bit can help your employees do their jobs better which translates into more profits.

Outsource

Outsourcing is often the best way to run certain parts of your company because you can tap into the skills of a team of professionals. Business owners are often wary about it in the early days because it seems like a lot of money to spend but now that you can afford it, it’s something you should revisit. In the long run, it often works out cheaper to outsource digital marketing or fulfilment as long as you’ve got the money to pay for it upfront. It’s a good alternative to taking on an employee full-time because if you hit a bit of a rough patch it’s easier to stop paying for outsourced services than it is to start laying off employees that you’ve recently hired.

Save Cash

The business world is so unpredictable and just because things are going well at the moment, that doesn’t mean you aren’t going to hit a rough patch in the future. If you can’t afford to keep things ticking over until sales pick up again, you risk folding completely. When you’ve got a bit of surplus money, it’s always sensible to put some of it aside into an emergency fund so when you do hit hard times you’ve got enough to get by. When you get those first profits, take a small chunk to put in savings and then use the rest to invest in the company.

It’s always tempting to take those profits and spend them on yourself but you need to look to the long term and start reinvesting in the business if you’re ever going to see it grow.

Comments are closed.