Profits Investment: How to Reinvest for Success
Profit is the most important thing in business, even if there are other things you would like to achieve such as ethical trading or environmental goals, these will be easier if you are turning a healthy profit. We need to think about what we might do when we make a profit, other than spend it. Here is our guide to reinvesting our profits for long-term success.
Assess How Much You Have to Play With?
How much you can afford to invest is an important question to ask as there is a difference between funds that are available for investment and cash that’s in the bank, this is the difference between investment and spending. A right way of differentiating this is to produce a balance sheet regularly, this will detail your assets, such as cash, stock, and invoices due, against liabilities such as debts and bills that are due.
Easy Access vs Long-Term Investment
One decision you will need to make is where to invest any profit that you have made. Often there are times in business where we unexpectedly need cash when we were not planning for it; a breakdown of plant or machinery; or a customer who goes out of business before paying a large bill. If you choose to invest in a long-term investment such as property or any fixed-term scheme, be mindful that these funds will not be immediately available to you despite being assets on the balance sheet.
It’s always useful to look beyond your borders when looking to invest. The beauty of the modern world means that we can invest in funds, companies, and more at the click of a mouse or the swipe of a finger. You can even put your money into new and unregulated cryptocurrencies, and it’s as easy as this guide which shows you how to buy Bitcoin.
Your company can be a shareholder in another company, so long as there’s no nefarious intent or issues that would threaten a monopoly. Sometimes this is done for structural reasons with subsidiaries of parent companies owned by the parent firm, it keeps everything legally separate, so in case of any disasters in one sector, it doesn’t bring down the whole operation. It is prudent to invest in the parent company rather than the subsidiaries.
If you are so minded, there are lots of investments you can make that are of the more unusual variety. You can choose anything that takes your fancy, classic cars, art, coins, or even precious metals. The choice is endless.
This one is not an investment but a useful thing to do with any excess profit in your business. It’s not so uncommon, and recently we have even seen soccer teams give away their shirt sponsor space to a charity, the highest-profile example being Barcelona, one of the biggest on the planet. It may not be as daft an idea as it seems, it will do wonders for your image, and you even get some tax relief for charitable donations.