5 Ways You Should Invest Your Company’s First Profits

reinvesting your profits

Congratulations!  Your site is up, and if early numbers are anything to go by, your product is a hit!  The profits are starting to trickle in as intended, but… now what?

Reutilizing your Profits

While the temptation to “Treat Yourself” is probably very strong, and there may be some personal expenses waiting for your attention, there are some business savvy ways you should use those profits, too.  In fact, investing back in your business is one way to help those profit margins continue to grow, which in turn will provide you with more opportunities to “treat yourself” in the long run!

Let’s look at five meaningful ways you can invest your company’s first profits back into your business to promote growth and opportunity.

Marketing and Advertising is the First Step

If a particular ad or marketing strategy is working very, very well, then by all means, continue to use it.  Putting your profits towards creating a more robust marketing strategy is a great way to help those dollars continue to multiply.

You may be familiar with the “Survivor” strategy of advertising.  In this method, profit is invested in paid traffic venues that are performing well.  As long as those clicks are up, you can continue to place a significant amount of your profit in those methods.  At the end of the ad period, evaluate which options are performing well, and which are not.  Any paid traffic stream that is still profitable is a Survivor, while those that are not can be ended.

This method involves a bit of strategy, and tracking your returns on investment, but can be a great way to help your profit continue to grow by marketing purposefully to an excited audience.

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Alternately, you may wish to use your profit to find new sales channels.  This can be a bit riskier, especially at first.  You will at least learn from your experience which sales channels do and do not work for your products or services.  Still, you can’t know unless you try, and some previously unexplored sales channels may be extremely lucrative.

Just be sure to do your research and come to the table with fantastic content!

Outsourcing as an Investment

Speaking of content, this may be time to invest that profit in some options that will give you an edge.  When we first start our businesses, it’s generally a very small operation, with just one person wearing many hats.  

Great news:  We currently live in a world in which freelancers of all facets of business strategy are ready to help… for a price, of course.  If you feel your content is lacking – or takes too much of your very valuable time – you may wish to hire a copywriter.  If your logo looks like something you drew on a napkin during a sales pitch, perhaps you engage a graphic designer. 

You can contact videographers to help you set up your YouTube channel, page developers to improve your overall UX/UI… you can even have someone write you a theme song, if it feels appropriate.

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Any of these options will serve to enhance your site, and lend a sense of expertise to your pages.  A professional look can go a long way towards legitimizing your business in the eyes of online searchers.

Invest in Professional Development

Hand in hand with outsourcing comes investing in your own professional development.  It may not make sense for you to spend your time and energy buying and learning how to use video editing software, so you can potentially use your profits to outsource that task.  But when it comes to networking, building effective landing pages, and learning the latest and greatest SEO tactics, you really need to be on the beam.

Investing in your own professional development is a fantastic way to increase your knowledge and skills.  Online courses and workshops can provide plenty of information that is relevant and helpful for moving your business in the right direction.

Have you already read “Think and Grow Rich”?

Additionally, your experience in these classes can help you earn that “trusted resource” badge that makes your business stand out from the rest.  Every advantage you learn and implement in your business can open a door to greater profits.

And of course, the people you meet along the way are your new network, helping you gain a foothold on additional opportunities along the way.

Find Your Competitive Advantage

You’ve surely heard the phrase “time is money”.  Well, if that’s true, then isn’t the inverse also true?  One way to use your profits is to buy yourself additional time in the market for improvements.

products comparison - reinvest your profits

Let’s say you sell Product A.  Product A is perfectly saleable as it is, but sometimes, users have difficulty with a few of its settings.  Not always, but often enough that you’re starting to see this difficulty reflected in some of the otherwise glowing reviews your customers are leaving on your site.  This is not the reputation you want.

There is an option:  Product B.  Product B is exactly like Product A, only it has all of the bugs worked out.  It is perfection.  Unfortunately, Product B costs more for you to stock than Product A, with a pretty similar return on investment.  

This is a great opportunity to use your profits to establish your company’s competitive edge.  Instead of making more money off of Product A, invest the profits in Product B.  Acknowledge the poor reviews, and frame your investment in customer satisfaction.

When you make a business decision to offer the “better” product, your customers will appreciate the move.  Whether you develop your own products, or simply find something that better reflects customer need, you will be rewarded with more sales for a solution that fits your customers needs better.

What About a Cash Cushion?

This may seem a bit obvious, but for many new business owners, building a nest can be a very slow process.  

Setting up a business may require a lot of capital.  Your very first actual sales will likely help pay investors, loans, and suppliers for their efforts.  It may be several months before you see true “profits” that put your entire business in the black.

When you get to this point, of course you want to invest in more opportunities, such as those mentioned above. However, it’s also not a bad idea to invest outside your business – either in an emergency contingency account, or in an account used strictly for taxes, rent, or retirement.  While the immediate future of your business is extremely important, looking beyond tomorrow and playing the long game is crucial for your own future.

Enjoying a small splurge to celebrate your first profits isn’t necessarily a bad thing; however, it’s important to keep the cash flow in the right direction by appropriately investing in your business.  As your profits increase, make sure you’re investing a hearty percentage of your earnings in one or several of these outlets to help give your business a solid base and tangible future.

What about you, now: how would you invest your company’s profits? Please let me know in the comment section below!

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