Where Should My Business Invest Its Profits?


As an SME owner, you have to be a confident decision maker. After all, well made and confident decisions are vital for making a business successful. These bold and confident decisions extend also extend to the reinvestment of business profits. Spend this money wisely and you’ll be able to reinvest it in your business, using it to grow the business and strengthen it. But, where should you put it? In this post, I look at four key areas you can invest in to strengthen your business.

Your Employees

As a business grows, so must its employees. I won’t dwell on this too much, as it’s likely that you’re already reinvesting in your business, as it’s relatively self-explanatory. However, if you do not invest in your employees, then your business will suffer in the long term. This applies to a number of different aspects of your employees, such as (but not exclusive to):

  • Training
  • Wage increases
  • Promotions
  • Team growth

If your employees feel valued and like they’re getting credit for business growth, then they’re much more likely to stay with the business. In the long run, this will also save you money, as you won’t have to train any new starters and will retain crucial business knowledge and camaraderie.

Invest In Another Small Business

If you’re a successful business, then you should look to expand. The best way that you can do this is to either acquire or buy shares in companies that will complement your own. For instance, if you run a web design agency, then acquiring an SEO or a PPC agency would also be beneficial. If you end up with enough cash to buy the current owner out entirely, you’ll have another arm to your business that you can naturally incorporate. This way, you’re adding another stream of revenue, too.

But, before you invest in another small business, it’s vital that you do your research. Sometimes, opportunities are not as good as they seem. So look into the company’s history, and be forensic with the way that you go through their accounts and perform due diligence. Most importantly, get an expert in to help. This will be a large financial investment, so spending the money on an expert will help you get the legal parts right.

Look At Real Estate

The price of property is always rising. While people used to warn of a ‘property bubble’, many experts now accept that the rise in property prices shows no sign of ending in the next decade. As such, you should look to break into this new market for your business. But you must select somewhere of strategic value. This doesn’t necessarily have to be property in this country, as you could get better value elsewhere. Whether you invest in commercial or residential property is up to you, but make sure you do your research before you dive in. The property market isn’t as hot everywhere.

Take A Plunge Into Financial Markets

The downside to investing in property is that your profits can be tied up in a way that prevents you from accessing them when you need them; especially as properties can take months to sell. Due to this, many business owners choose to invest their profits into financial markets, either through stocks and shares or forex. This is because, if required, a position can be sold immediately, and cash recovered (hopefully at a profit). There are now a variety of online platforms on which you can do this.

Forex essentially is the trading of foreign currencies, where you can make money from the exchange rate. As you can execute trades in seconds and withdraw from your position after only a minute or so, you can have access to your cash when you need it. However, trading forex (or stocks and shares), is incredibly difficult, so ensure you do your research before you begin.

To conclude, there are a number of ways that you can invest your business’s profits. Just find one that suits you.

Marcus Turner Jones

Marcus graduated in Economics from the University of Sheffield before working in London in the finance sector. He now lives in Buenos Aires as a freelance writer and investor with his dog, Luna.