When your business starts making a profit, you have a choice — keep the money, or put it back into the company. Both options are valid, but if you’re looking to expand, reinvesting profits is a must. The trick is figuring out where your money can make the biggest difference.
1. Make Business Improvements
Chances are, you can name several areas of your operation that need improvement. You might be working on an older computer, for example, or using inefficient machines in the factory. This is a great place to start reinvesting profits. The best investments are things that make you more efficient or create a better experience for customers and employees. If you run a graphic design business, you might upgrade to new illustration software. If you have a store, you could make customers happier and shrink transaction time with a faster cash register.
2. Employee Development
Your employees are a great asset to your company. To make them even more powerful, consider reinvesting your profits in development and training. With continuing education, your employees can take on more responsibility or help expand your business’ service offerings. Investing in your people also builds loyalty, which can reduce expensive turnover. Don’t forget about yourself —if this is your first time supervising employees or running a business, management training or business classes can help you steer the company more effectively.
3. Hire Additional Staff
Are your employees stretched thin? Is your company just barely keeping up with demand? If so, you might consider using your profits to hire additional staff. More employees can help you handle more orders, which increases productivity and profits. New hires are also a great way to shore up weak areas of the business. If you struggle with accounting and goods and services tax filing, for example, it may be worthwhile to outsource your financials. Easing the workload for your existing staff also creates a happier, more relaxed company culture.
4. Go Digital
India’s internet user base is expanding. Your company can keep up by using profits to strengthen your web presence. If you don’t have a professional website, now’s the time to get one. If you do, you might add online ordering, build a resources section, or add a customer service chat bot. Do your customers use social media? Your profits can buy the services of a social media manager to help your Facebook and Instagram accounts reach more people.
5. Expand Your Business
If you’re happy with your current team and the state of your company, it might be time to think about using profits to expand your business. The scale of the expansion depends on your cash flow. On the more conservative end, you could add a new product or service to your current offerings. Another option is to build your inventory of best-selling products. Ready for something bigger? If your profits are high, you could move to a bigger space or open a new location.
Deciding how to reinvest your profits is an exciting process. When you choose investments that are in line with your long-term company goals, you can maximize your gains and build wealth faster.