When a business starts doing well and makes profits, the business owners begin wondering what they must do with the profits. While many novice businessmen choose to just extract the profits and pay themselves more, it probably isn’t the best of ideas to go about it, from the futuristic point of view. Starting a business requires investment and business growth requires reinvestment.
While many do it to save on taxes (which is completely legal), there are a lot of businessmen who don’t get it right. It is important to understand how to reinvest into your business, in order to understand what portion of your profits can be utilised for the same.
With that said, here are some ways you can reinvest into your business.
Invest in Brand Visibility for Business Growth
Knowing your company shouldn’t be enough for customers. And it surely shouldn’t be enough for you. There is a difference between knowing a brand and wanting to buy from them. Marketing the right way will help you gain the necessary customers.
If you are spending a certain amount now, you know the returns it brings you in terms of revenue. You also know the cost per customer acquisition. If you turn up the amount by a certain percentage, you know the direct impact it will have on attracting more customers, and the relation it has with your cost per acquisition. This is a method that will directly translate into further profits.
A key point to note is that marketing also has a saturation point. Thus, try to estimate the amount beyond which results could be stagnant, because that would be an indication towards you spending too much too early.
Brand visibility online, differs from the same, offline. Hosting events and promotions, though a traditional and old-school technique, seems to work wonders when it comes to increasing brand awareness. Reinvesting into hosting events for existing customers is also an excellent way of showing your appreciation towards them, especially if you run a business whose marketing works best through word of mouth.
Invest in Hardware
Hardware could be any physical asset of your company – computers, fax machines, or even the desks and chairs for your employees. The best way to go about reinvesting in hardware is by taking a consensus of your employees. Find out what the office needs. If it is new chairs, do it! It will translate into direct comfort of your employees during their work hours, which means lesser breaks.
Investing in hardware is a long-term investment. You are not going to invest in hardware for the next few years unless something is outdated or damaged. Choose to invest in hardware that increases efficiency.
Time-Saving Software
We always feel that there is just not enough time to do all that we want to do. And if there is, you aren’t doing enough.
Thus, why not gain back valuable time, by automating processes. If you are sending out campaigning emails individually, why not invest in a software that allows you to create a list and send emails to all at once? Investing in updated software will help you and your employees save time and focus on rather pressing tasks. For bigger businesses, considering software that help integrate data and link among other software to stream workflow, would be an excellent idea.
Employees (happy employees = business growth)
Reinvesting in increasing team strength would be an amazing way to expand your company, and an apt use of your profits. Better talent means better performance for the company, which eventually means more profits!
As for existing employees, enhancing their benefits package would work like a charm in showing your appreciation and keeping them motivated. It could include pay hikes, flexibility (a much desired perk in this post-pandemic era) or growth opportunities.
Employee Career Growth
If existing employees do not feel challenged at their current roles, they are soon going to feel monotonous, and the routine is going to get to them. The chances of them seeking challenges elsewhere, means you will need to spend time and money to hire and train new talent.
Why? Invest in the growth of your existing employees. The deserving ones need to be shown the next step on the ladder, given more responsibilities (including managing a team if you are hiring fresh talent too) and rewarded for their work thus far. This will keep them from looking elsewhere.
Furthermore, give them options to increase their knowledge, by investing in courses and/or platforms that allow employees to register for higher studies while still working. Such an investment is generally highly appreciated and turns out to be a beneficial reinvestment. Such long-term strategies prove to be the distinction between good and mediocre companies.
Invest in Business Growth or Expansion
There may have been ventures you wished to explore but were caught up in trying to make the most of your business’ current focus. Reinvesting profits into expansion is an excellent way to promote business growth. Viewing possible opportunities as a way to expand your business’ reach or segments, is an excellent strategy to secure long-term gains. Since it is “investments” we are talking about, we want “gains”.
Invest in Yourself
One of the most important investments to make is to invest in yourself. As a leader, businessman or a skilled professional, it serves well when we are keen on learning. Take up courses, attend seminars, join workshops and meet like-minded people. This works wonders, by not only increasing your credibility, but also in leading your company into a better future.
Many businessmen do not pay attention to their learning curve, which begins affecting the way they decide for their business. Once decision-making is affected, it starts impacting profits. Reinvesting in yourself could be one of the smartest ways to pump profits back into the business of your dreams.
While profit-making is a commendable stage in the life-cycle of every business, it comes with its own challenges. Deciding which aspect of the business needs a boost, will help you estimate the percentage of profits that go into it. Reinvesting in your business could be a very smart tactic at long-term strategy, if done right.
What steps have you taken to reinvest in your business? Or which of the above are you going to incorporate the next time?
Let us know in the comments below.