The Do’s and Don’ts of Early Profit Spending

business chart photoAs you make the transition from in-the-red to in-the-black take a moment to congratulate yourself. You’ve done it! The company you built from an idea is now turning a profit. How and where you spend those hard-earned dollars will fuel your business’s growth or speed its failure.

While giving yourself a raise and a vacation may be the first things that come to mind as you begin to see dollar signs, the best way to determine where to invest profits is to pinpoint what is currently making your company profitable as well as what is costing you money.

Investing in stellar talent is an excellent way to use some of your profits. Think about the biggest opportunity within your business. If you scout and hire a key employee to pursue that opportunity, they will increase the profit-generating side of your company and eventually cover their salary. Conversely, rashly hiring a slew of employees with undefined roles will create a payroll that consumes your profits and a team that monopolizes your time needing management.

Technology or tools that you couldn’t afford as a startup may now be within budget. Again, think about what one thing would most benefit your company and either save money or make money. Is there a technology that would increase productivity and eliminate a source of friction in your business? Do your homework and talk to other entrepreneurs about the technology and tools they are using. Most will give you honest answers that will help you find the exact thing you are searching for and could save you misspending thousands of dollars.

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