How Can Your Profits Become More Profit?

The best of the best in business will know that profits aren’t totally for investment into the company. Instead you should be investing in other companies as well. The classic, tried and tested saying of ‘let your money make money’ is truer now than ever before. Nowadays business leaders have so many opportunities of all kinds of invest their profits into new and exciting startups, buy shares of giant multinational corporations, work with expert investment firms, and even take to the market with incredibly adaptive index funds. There’s one main reason why you should be investing your profits. You never ever know when a rainy day will come your way. And you know what they say, when it rains it pours. You need to have a safety net literally made of money to make sure you’re never in serious trouble. Another global financial crisis of the magnitude to that of 2007/8 is something you need to plan for.

The philosophy behind it

Of course, no one wants to believe their business will fail. It can be seen as harsh to put yourself in the mindset that your business won’t succeed and all your hard work and dreams will crumble. However, it’s a mental task that you must perform for the good of your business. Say for example, you released a new product that you invested into a lot of your funds. Sadly, it doesn’t seem like it will be such a big hit and you’re going to lose a lot of money on it. However, if each year and or financial quarter you have put some of your profits away to gradually begin doubling or tripling, you can use the money gained to recoup the losses you made.

But, how much?

How much you put away is going to be different as pertaining to your specific situation. Figure out how much profit you made for the previous eight financial quarters. Add them all up and divide them by their own number. This way you’ll get a mean average of profits you made for the last 2 years. Whatever amount you get, you should be using at least 5% to invest with. It’s recommended that you try to increase this to 10% if you can. Stick to a percentage number that you feel most comfortable with but definitely aim for one-tenth of overall profits made after 3 months of trade.

Firms with portfolios

If investing is not something you feel confident about, then do what every business does. Invest your profits with an investment firm that specifically works with business owners. The entrepreneur to entrepreneur style that Alpha Blue Ocean uses, is straightforward and easy to understand. They specialize in helping mid-sized businesses which offer an alternative to investment schemes offered by banks and other conventional financial institutions. They are a non-invasive investor and passively invest your money to broaden the chances of a consistent return.

Don’t sit on your profits, use them to make more profit. Small business owners must build their own safety net so they’re ready for the next crash or possible decrease in expected financial quarter performance.

 

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