How to Handle Business Profits

I was watching a video presentation of a wealthy man in Nigeria speak recently, and he was talking about a very popular mistake that young entrepreneurs make, and according to him, the mistake is always thinking about how to spend the little profit we make from our businesses, hoping that these profits would continue to roll in as they have done.

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He said, What we fail to realize is that business days are not usually rosy, so while we spend the profit from today, we may not have a lot of profit or even any profit at all tomorrow.

In today's post, I want to talk about what we should do with our business profit. It's not like I am an expert myself, as I am only learning to manage my small business, but through the inspiration of books and reviews from top businessmen, I believe we can all learn and grow together.

This article is focused on small businesses that usually struggle with what exactly should be done with their business profits. Should it be squandered, since a man needs to learn to enjoy life once in a while?

The first point of consideration about a business profit is learning to save it for rainy days. It is almost impossible to rightly predict what could happen with a business the following day or moment.

Since the future of the business is barely certain, it is a wise option to save in preparation for the rainy days. These rainy days could be in the form of a business emergency or revenue not coming in as they should.

Having money saved up for a business is one sure way to experience longevity in the business. You must be able to consistently affirm that you will be able to keep the lights on in your business even during the days of slow sales.

Re-investing into your business is a smart option as well. Regardless of the level your business is at, it is important that you continue to improve on it, so be dedicated to reinvestment all the time.

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Reinvesting may mean you are expanding, or you are adding extra layers to a particular team. It's basically any act that promotes the growth of the business.

Learning to reinvest in your business in its early days will eventually help to improve profit margin later in the future.

Before thinking about enjoying your profit, remember the possible loans you took to start out the business; it's probably time to start repaying those debts.

It's time to improve on your team too, as your business grows; you need a better team to make things much better. Invest in growing your team and making the best out of them.

I really don't think a little pat on the back to appreciate yourself is going to be a bad idea; just make sure it's nothing too much.

I believe this is where the salary you pay yourself comes into play; every entrepreneur should pay themselves, but your business shouldn't shake at the removal of your personal salary.