June 10, 2015 Cash Flow en_US Got extra cash? Awesome! Now it's time to re-invest it. Whether it's in R&D, infrastructure or marketing, learn about options for re-investing your profits. https://quickbooks.intuit.com/cas/dam/IMAGE/A0BxRkbkZ/271966aa8bac624660a6d42c89b57156.png https://quickbooks.intuit.com/r/cash-flow/3-ways-small-businesses-can-re-invest-profits 3 Ways Small Businesses Can Re-Invest Profits
Cash Flow

3 Ways Small Businesses Can Re-Invest Profits

By Bridgette Austin June 10, 2015

Congratulations! After lots of hard work, determination and sheer grit, your business has begun to generate profits. Before you start celebrating, however, you must first make a decision: Should you distribute those profits to the owners or put them back into your business to fuel company growth? If you choose the latter, it’s best to have a solid strategy for re-investing those profits.

Where you invest your money—especially during the startup phase of your business—depends on your company’s mission and long-term vision over the next three, five or ten years. Consider these three methods for re-investing in your business to bolster your brand’s competitive edge, reduce business risk and realize long-term financial rewards.

1. Invest in Infrastructure and Operations

As a startup, an influx of capital at the beginning stages of your company is essential for entering the marketplace with a viable and competitive product. That means re-investing profits into areas like:

  • Research and development
  • Physical assets, including retail stores and manufacturing plants
  • Virtual systems vital to operations such as information technology

Brenton Hayden, founder of Renters Warehouse, advises business owners to “Be strategic, and apply funds in line with your specific development plan and your business needs, but don’t invest to the point of cutting other aspects of your company short. Make sure there’s enough to cover all of your other expenses.”

In other words, invest your profits where it makes sense for your company. Assess your current and future financial goals, the areas where you need extra support and expertise, and what you want your business to accomplish in the long-run.

Outsourcing basic and skilled tasks, such as social media management and bookkeeping, can also free up valuable time that can be redirected towards generating new business. Upwork, Fiverr and Guru are examples of staffing sites that match business owners with skilled freelance professionals.

2. Invest in Your Employees (and Yourself)

Having a great product is nice, but working with a team of dedicated and talented professionals who can help your customer base grow and your company flourish is even better. Moreover, high employee turnover is costly and can have a negative impact on company performance and employee morale. For instance, the average cost to hire a new employee was more than $3,582 according to the National Association of Colleges and Employers (NACE).

“You may not always have the cash, especially early on and when you’re growing, and often throughout. So as a business owner you need to be resourceful and creative. See if you can gain expertise, support and time from others to help you build you business,” says life coach, speaker and business coach Rasheed Ogunlaru in “Reinvesting your profits into your small business.”

Thus, consider investing in resources and training that allow both you and your employees to build subject-matter expertise, technical skills and know-how for running operations smoothly and efficiently. Dedicating financial resources to internal training and workshops will help employees keep their skills current. One example is CustomerCentric Selling, which is dedicated to training professionals in tried-and-true sales methodologies.

Also, don’t be afraid to ask for help when you need it. Many successful entrepreneurs and startup founders have credited experienced mentors when it comes to tackling obstacles along the road of launching and running a business.

If there aren’t any trainers within your organization, join trade associations within your sector. Organizations such as the National Restaurant Association frequently host webinars, conferences and networking groups for restaurateurs interested in exchanging information and best practices with other owners and operators.

3. Invest in Marketing and Public Relations

Most seasoned entrepreneurs would agree that investing in marketing activities to promote your business online and offline are important for not only building your brand, but driving new and recurring sales. Facebook, Twitter and other online social networks have helped level the marketing playing field, allowing small companies to compete with larger competitors by targeting specific customers at little to no cost.

Ideally, your online marketing strategy should encompass a number of things:

  • Earned and paid advertising
  • Social media
  • Public relations
  • A corporate website that helps bring all of these digital elements together

“The website is the central component of any business’ digital strategy; it’s how your current and potential customers can most easily find and connect with you,” says Search Engine Land. However, if money is tight and online tactics such as promotional ads are unrealistic for your budget, consider less expensive ways for marketing your brand. Speaking engagements, ongoing social media campaigns and cross-promotion with non-competitive businesses can all be effective ways for engaging your customer base, building industry credibility and receiving word-of-mouth referrals.

Re-investing money is important for any business, but it’s important to remember to take care of the people that make the business successful as well. To help you with your own personal upkeep, here are four ways to re-invest your personal time in your own well-being.

Bridgette Austin

Based out of New York City, Bridgette is a technology writer in the higher education sector. Throughout her career, she has written a variety of business publications for organizations ranging from Big Four accounting firms and environmental consultancies, to software and college textbook companies. Read more