Nine ways to capitalise on business profit

in Growing by Nigel Bowen
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business profit

You've been reviewing your company's financial performance and discovered there's more money coming in than going out. Here are a few suggestions on how to capitalise on that business profit.


Make it work for you


Whatever you decide to do with your profit, you want it to be providing maximum benefit to you and your business rather than being diverted elsewhere. The first thing to do is to sit down with your accountant and find out the best way to go about spending or saving business profits in the most tax-effective manner possible.


Lock it away


It's great that things are going well now, but capitalism works on a boom-bust cycle. You never know when you might hit tough times and need sufficient cash reserves to operate at a loss.


Pay down debt


It's a good idea for anyone who's a debtor to throw any extra money that comes their way into reducing their loan, and it's no different with businesspeople and business loans. Making even a small dent in your loan now can result in huge savings over time.


Take over a competitor


If you're making a profit while one of your competitors is not, there's always the option of investing. If it's economically feasible, consider buying the flailing business at a rock-bottom price. You can then ensure it is run properly and find yourself with an even greater profit.


Invest in your own business


Are you interested in purchasing some new equipment? Looking to upgrade to a larger space? Keen to hire more staff and inject some life into your work-life balance? Now is the time.


Invest in yourself


This can take two forms. First, you may wish to spend some money developing your professional skills or perhaps acquiring a qualification that will ultimately allow you to generate more business. Second, you might just want to park all or some of your profit in super to ensure you can retire comfortably.


Just invest


A little diversification is wise and there's no reason you can't put any spare money you have into a high-interest account, managed fund or investment property. Unlike some of the other options listed here, this means you're likely to keep earning a return on the money even if your own industry goes into a slump.


Share it with your workers


Your staff have probably played an important role in building your profitable business, and while you're under no obligation to share the rewards with those who didn't take on the risk, you may want to share the love by either giving your workforce a bonus or raising their wages.


Spend it on yourself


Getting a profitable business up and running requires enormous amounts of hard work, sacrifice and self-discipline. So if you want to reward yourself with a new car or overseas holiday once you're generating a business profit, that's entirely justified.


Whatever you decide to do with your business profit, remember that many businesses never make it into the black, so be proud that you're savvy enough to be at the helm of a commercially successful business.


This article represents the views of the author only and not those of American Express.



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Nigel Bowen

Nigel is a freelance journalist and web content provider. Over the past 15 years he has worked for many of Australia's major print media companies and written for a wide range of newspapers, magazines, trade publications and websites. Nigel most enjoys writing about entrepreneurship, popular culture, politics, social trends and small business.

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