When your small business starts to make a profit you should be thinking about what you will do with those profits.  Placing all of the profits into your pockets, taking a nice long vacation or throwing a lavish party are probably not the best things to do with those profits.  You have to think about how you can best utilize those profits to make the business better.  With that in mind, these are the some things you could do with those profits.

These are the top 20 things a small business should do with their profits. 

1. PAY OFF DEBT:

Paying off debt is one way you can use profits.  Paying off debt will not bring any immediate benefit to the company but in the long term you will avoid having to pay the interest on loans.  Paying off debt also puts your small business in good standing with your creditors.

2.  RAINY DAY FUND:

Establish a rainy day fund.  Always keep a certain amount of your profits in a rainy day fund to address any unforseen situation that may arise. 

3.  REINVEST IN MACHINERY:

Reinvesting a portion of your profits in machinery is a great idea.  Machinery includes industrial machines that you use for manufacturing, information technology equipment such as computers, copiers, etc.  Giving your employees bettery machinery to work with will make them more efficient and improve their morale.

4.  HIRE MORE EMPLOYEES:

Hire more employees.  Hiring more employees will allow you to produce more and hence grow the business.  Keep in mind that when you hire employees you have to pay their salary as well as benefits (to include medical).

5.  INCREASE MARKETING:

Spend more on marketing to grow your customer base.  Making more potential consumers aware of your brand will bring in more customers that will directly contribute to the bottom line. 

6.  EXPAND TO NEW LOCATIONS:

Expand the business.  Take some of the profits and use it to expand the business by opening new locations, franchise the business, or look at doing mergers and acquisitions.

7.  MAKE CHARITABLE DONATIONS:

Take some profits and make charitable donations.  Making charitable donations will reduce your tax margin because they can be claimed as deductions.

8.  INCREASE EMPLOYEE BENEFITS:

When you’re profitable you should always try to do something good for your employees.  You could increase employee pay, give them paid sick leave, etc.  This is great for morale and could encourage your employees to become more productive when they see a direct relationship between their work, the company becoming profitable and getting a benefit in return.

9.  INTRODUCE NEW PRODUCTS:

Develop and introduce new products.  As the business becomes profitable launching new products gets easier.  You don’t have to seek outside funding.  You can focus more on your brand.

10. NEW FACILITY:

Move into a better facility.  Now that the business if profitable and you have the resources to grow a new facility might be just the thing you need to hire more employees or create a more efficient production process.