In the public mindset, those who make money from a business have “won at life” and are ready to sit back and relax with their wad of dollars. However, as any entrepreneur can tell you, it’s not nearly that simple. That’s because most money that any business makes ends up being reinvested somehow in order to grow even further. Where should this cash be reinvested? This blog post will tell you the answer.
Stock and sites
In the past, business models almost always followed the pattern of making revenue and then reinvesting that in more stock to sell or a new site to open. That’s still viable, depending on your sector. If you work in manufacturing, say, then this is often a good move, or if you have customer-facing branches on Main Streets, then it may be a wise chance to expand. Just don’t forget to apportion some of the new profits for market research – otherwise, you may find yourself buying dud stock or leasing a store in a town with no demand.
Investing in the marketing side of things is also a good way to spend your profits. That’s because a well-performing marketing funnel is an excellent way to get new customers, who are, of course, the ultimate source of the next batch of revenues and profits. You could choose to put spending behind some Facebook adverts, for example, and then monitor the click-through rates. Or you could buy guest blog posts and see your site become more successful in Google search results. This kind of spending sometimes feels like a luxury, as it’s not always strictly necessary if you’re able to bring in revenue through other means. However, by diversifying your revenue generation streams through marketing, you’ll be in a stronger position in the long run.
For many businesses that are in a growth phase in this day and age, however, their main asset is often actually staff rather than physical goods and services. This means that there’s a clear reason to invest in human capital if you have some leftover profits – and it’s wise to use this as an opportunity to identify areas where your operations currently fall down, and use new staff to plug the gaps. If you run a technology company, for example, a buggy website is probably costing you both financial and reputational capital – so why not hire a second web developer to take some of the load off the first one? While hiring people is an expensive business, it almost always pays for itself – especially if you’re clever about what you choose.
If you have a growing business under your belt, then it’s worth thinking carefully about where you choose to reinvest your profits. Whether you decide to do this in marketing or you think it’s best to hire new staff, it’s always a good move to pay for something that will enable even further growth to help propel your business forward.