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.
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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.
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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.
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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.
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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).
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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.
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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.
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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.
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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.
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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.
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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.
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