So you’re looking to reinvest your profits back into your business? The best way to reinvest profits is to invest in things that will help you save money and/or time, or will help you earn more in the future. Below is a list of seven things you can do to reinvest profits in your business.
Reinvest Profits into Marketing Your Business
Perhaps one of the most exciting ways to reinvest in your business is to funnel additional funds toward your marketing efforts. This has a direct impact on the growth of your business by bringing in more revenue and, given that you know how much business your current marketing efforts generate, it’s relatively simple to estimate the impact of an increased marketing budget.
For example, if you currently spend $1,000 per month on a PPC campaign that provides you with an average of $7,000 in business every month, you can use these numbers to estimate the impact of increasing your marketing budget. For this example, if you chose to increase your budget by 50%, or $500 per month, you may be able to increase revenue by 50% as well.
Marketing pitfalls to avoid
Make sure that you are estimating the impact of that exact marketing channel. If half of your business comes in through word of mouth, your marketing budget will have no immediate impact on that cohort of revenue.
Think of your estimated increase in revenue as an upper limit, not as a promised return. Marketing suffers from saturation and diminished returns. That is, as you spend more, you will likely see a decreasing efficiency of your marketing spend—you can’t simply continue to double your marketing spend and expect to see the same increase to your revenue.
Invest in New Hardware
Has your computer been slower than normal lately? Do your employees take more breaks because their chair is old and worn out? Investing in hardware can save you money in the long term if it can help you and your employees work more comfortably, effectively and/or efficiently.
When reinvesting your profits into new hardware it’s best to look for investments that you deem valuable. For example, buying a new computer because it’s faster and more effective is probably worth it. However, buying a new computer simply to have the latest model when you just upgraded the year before may be wasteful.
Invest in Time-Saving Software
One thing most business owners know is that there are never enough hours in the day. If you have the money, consider investing in software that can save you time and help your business run in a more automated way. The right software can give you (and your employees) hours back each week.
For example, PaySimple can help you integrate recurring billing capabilities into your company. Not only can this save you time, but it can also help you improve your cash flow as your clients will be automatically billed without you or your employees having to think about it.
Another potential option might come in the form of integrating your existing software, giving your business the ability to link data through various other sources (think QuickBooks Online, MailChimp, or Constant Contact) that you already use.
Invest in Employee Morale
2021 is being called the “great resignation” and many employees are deciding to change jobs as they look for more flexibility, more pay, and better benefits. Because it’s much cheaper to retain your talent than compete for new talent in this competitive job market, it’s best to do what you can to keep your top employees happy and wanting to stay. This can generally be done in two ways: employee benefits and employee growth.
One way to foster a great culture, and ensure that everyone is on the same page is to create an employee handbook. This tool is an essential resource for small businesses because it lays out expectations for everyone in the business.
One popular benefit many employees are looking for right now is flexibility. With the global pandemic, many employees got used to working a flexible schedule from home. Many employees now enjoy having more free time and a shorter commute. If your company can make it work, continue to allow these top performers to work in the way that they deem best. This benefit could potentially even save you money as you may require less office space if people are working from home.
When trying to determine what your workforce values, sometimes the best thing to do is to ask them. You could send out a survey asking what employee perks and benefits are most important to your employees, and even ask them for suggestions. You may be surprised with how simple their requests are, and while some ideas may be out-of-the-box they could also be relatively low cost which will save you money in the long run.
Finally, at the end of the day, don’t underestimate what a bonus or raise can do to keep your top performers committed to your organization.
Invest in Employee Growth
Nobody wants to stagnate in their career. If your people can’t grow within your business they will eventually find another place where they can grow. Investing in employee growth can benefit you in many ways. First of all, it can keep your workforce engaged and stop them from getting bored and looking elsewhere for more challenging and exciting work. Second, it can help them become better at their job as they learn more and become more efficient and knowledgeable. Finally, if you’re thinking about the long-term strategy of your business, investing in employee growth can help you groom tomorrow’s leaders within your organization.
Invest in Yourself
Are you the same leader you were a year ago? If you aren’t growing you may be stagnating. In addition to investing in your employees’ growth, it is also important to invest in your personal and professional growth. Is there a new skill or technology that could improve your business? Investing in yourself could mean anything from taking time off to reflect and plan the future of the company, to taking a course or hiring a business coach to help you take your business to the next level.
Reinvest Profits into Growth Opportunities
Being a business owner gives you a unique view of the world that most people don’t get to see. If you’ve seen interesting new business opportunities come about throughout your tenure, and you have spare cash, this may be the time for you to consider reinvesting your profits into testing one of those growth opportunities.
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