As a small business owner, you dream of the day when the entrepreneurial seed you’ve planted starts to grow and turn a profit. In addition to throwing some confetti and giving yourself much-deserved kudos, you may be wondering what to do next? The answer is: You should reinvest.

Let’s start with the basics.

Reinvesting becomes an option when net profits (the income remaining after all operating and overhead costs are paid) are retained and invested in ways that aim to increase the business’s overall value. The most successful entrepreneurs are those who avoid complacency. Showing signs of success shouldn’t lead to resting on your laurels. If you want your business to be around for the long haul, opportunities for improvement must always be on your radar.

Here at the BLOQ parq (tBp), we understand the value of strategic investments. When you genuinely believe in your vision, you need to nurture it. According to Forbes, conventional wisdom says small business owners should reinvest around 30 percent of their profits, with some people suggesting numbers as high as 50 percent. That being said, the amount spent isn’t as important as how it is spent. Having a solid business plan in place and tangible goals in mind is critical.

Here are some smart ways to reinvest when your business becomes profitable, and you have some extra cha-ching!

1. Increase Your Marketing Efforts

One of the best ways to directly impact your business’s growth is to put some extra money towards marketing and advertising. If you’re looking to bring in more revenue, attracting more customers is an area screaming for your attention. Digital marketing is becoming a necessity for small businesses looking to make a dent in the often large and competitive market. It is not a bad idea to incorporate conventional marketing platforms, but online is the best way to stay on track to get the most bang for your buck.

Your digital marketing strategy should include:

2. Take Your Technology Up A Notch

As an entrepreneur, you are no stranger to the concept that time is money — especially your time. Reinvesting profits into upgrading hardware or software for your business is a smart move if you’re looking to increase efficiency. Whether it’s purchasing an additional monitor or integrating a new tech solution, helping your business run smoothly generally equates to a greater Return On Reinvestment (ROR). Having suitable systems and resources in place is crucial (especially for small businesses) in a situation where every minute and dollar counts.

Miscommunication costs smaller companies of 100 employees or less an average of $420,000 per year.
Source: Debra Hamilton’s “Top Ten Email Blunders That Cost Companies Money”

3. The Power Of The People You Employ

The savviest entrepreneurs pay attention to the what, the how, and the who of their business. Defining your brand’s mission and understanding your target demographic is extremely important, but finding the right people to execute your vision is just as crucial. A great way to reinvest in your company’s long-term success is to put your money towards personnel. Whether you’re looking to attract new talent or retain the invaluable team members you’ve already acquired, you’ll want to implement training opportunities, reward systems, and appealing benefits. The take-away from all of this is that exceptional employees are synonymous with exceptional entrepreneurs.

4. Never Underestimate Your Self Worth

As the leader and visionary of your company, you are indispensable. Don’t confuse confidence with cockiness, but the sooner you recognize your worth, the better off your brand will be. It is worthwhile to reinvest profits into refining your entrepreneurial skill sets. Particularly those directly correlated to increased variables such as brand awareness, sales, profit margin, and customer retention rate. Consider signing up for a professional development workshop, attending a conference, or taking a continuing education course online. Just keep in mind the end goal of simultaneously developing yourself and your business.

5. Save For That Rainy Day

Thinking ahead and preparing for the unexpected is a smart move for any individual, particularly a small business owner. To assume that your startup capital will be enough to build momentum to keeping business going can end up being a significant pitfall. If an emergency comes up and you have nothing left in savings, you’re in deep… let’s say, the odds of succeeding won’t be in your favor. For this reason, it is wise to begin building some “just in case” funds. Accountants refer to this money as retained earnings because they are profits reserved for undetermined future use.

The Benefits Of Reinvesting In Your Business Are Big

The growth potential. The concept of reinvesting in your business acts as a beautiful cycle when done right. If you are successful, the money you put back into your business will increase your customer base, increasing your profits. Those additional dollars can now go back into building your business even more. This is the circle of life as an entrepreneur — smart reinvesting is what keeps a company moving forward.

The tax benefits. Here’s a fun fact not all entrepreneurs may be aware of: Reinvested money is considered a business expense. That means you won’t have to pay income taxes on it. It feels great to do something that benefits your business without giving more money back to the government. The opportunity to learn. Growth comes from experience (including making mistakes). Going through reinvesting will allow you to better understand what percentage of profits should be put back into the business and where that money is best utilized.

At the end of the day, what matters most is that you are genuinely invested in what you’re doing as an entrepreneur. Never lose sight of the “why” that served as your motivation in the first place. At tBp, passionate, hard-working, deserving individuals like you are the “why” behind everything we do. So if you’re looking to be a part of something greater — you’ve come to the right place.

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