10 Smart Ways to Invest Your UK Company’s First Profits

When your business profits start to roll in, it’s an exciting moment that calls for celebration. Once the celebration is over, it’s time to think of the best way to use these rewards.

Like most entrepreneurs, saving the rewards will be your first thought.

But is saving the only way to use your first profits?

Perhaps investing your company’s first profits will work well for the business and yourself.

So, if you’re confused about what to do, here are 10 smart ways to invest your UK company’s first profits.

1. Improve the Business

Startups mostly use their first rewards to reinvest in the business; you should be no exception.

Reinvesting is a sound strategy to help your company grow and profit. However, you don’t have to invest all your earnings but a good percentage of it. Plus, you should ensure the investment aligns with your strategic plan.

You can dedicate your first profits to the business by improving infrastructure, streamlining, purchasing equipment, or looking for ways to improve customer experience.

Investing in these strategies can increase your profits in the long run, allowing you to expand your business operations.

Alternatively, you can use your first profits to invest in better machines to boost service delivery or your products.

Customers want quality, and businesses need to be efficient to ensure they don’t only survive in the industry and thrive.

Identify anything in your business that needs a lift and invest in bolstering service delivery.

2. Self Improvement

As a business owner, investing in yourself is money well spent.

Why? You may wonder. It’s because the buck stops with you.

Without you, the business will likely not exist since you make all decisions and must be mentally in good shape.

So, you can equip yourself with new skills like taking a management course or educating yourself about HR or anything that makes you a better business owner.

Learn a new skill to help your business immeasurably.

A good example is the people in a startup; they’re driven by innovation but may lack the know-how to manage people. Thus, taking a management class helps them become better leaders.

Startup founders face a lot of criticism regarding management and leadership skills. Hence, taking an introductory business operations class is invaluable for anyone who doesn’t have a formal business background.

3. Invest in Your Employees

A business needs hardworking and skilled employees to succeed unless you’re a solo band. Thus, investing in your employees is a great way to benefit your business.

Paying for high-quality training and development will equip your employees with the right skills and expertise to compete in the market.

Giving your employees a chance to better themselves benefits them and the business. They can also become highly competitive when you introduce benefits and bonuses as rewards to those who stand out as loyal or most improved in service delivery.

Supporting your workforce will streamline your business, boost productivity, and cultivate a company culture that attracts hard workers.

Reinvest your first rewards in human resource initiatives like training and continuous education.

Investing in your employees early enough can limit turnover.

Remember, hiring new employees is costly and time-consuming when orienting them in their new jobs. So, it’s much better to empower your employees than bring in new people unless it’s inevitable.

4. Marketing

Marketing is the backbone of any business.

Today, investing in digital marketing is an investment you can’t regret when done correctly. Most startups may not have the financial provision for marketing, and it may take months before investing in marketing.

Although it may not always be a lack of funds, sometimes they don’t know where to begin or go about it. You can invest in performance metrics to help monitor your marketing campaigns and adjust according to actual data where necessary.

However, if you need marketing skills, consider outsourcing a marketing agency to help you do it right.

The links you build and the content you create in your digital marketing strategy will serve your business for many years. However, you’ll have to adjust or update them occasionally to suit the current market trends and attract more customers.

Besides, you can take a digital marketing course to help you follow the best practices for digital marketing. Tracking the metrics to ensure your investment is compelling.

5. Trade Precious Metals

Depending on your amount, it might be wise to invest in other assets, such as trading precious metals like gold or silver.

Precious metals are unrelated to the stock market and are an excellent investment method. If stock markets dwindle, the price of gold and silver may shoot as investors look for a “haven” to keep their money safe. Creating a preciousYou can invest in precious metals through an investment fund for these metals.

6. Don’t Invest - Save

How about NOT investing at all?

As a business owner, you never know when you need cash to deal with an emergency. Liquidity is crucial in any business, and if no place in your business requires lifting, you can keep your profits and access them when needed.

When you have access to some cash, you can inject it into the business anytime. Savings accounts vary in size and shape, but they all are low-risk and safe. Hence, they’re an excellent way to keep your business profits if you don’t have an immediate need for money or ROI.

You can pay a specific amount regularly into your savings account, and even though the profits might not be lucrative at first, you’re building a reliable fund. When interests hike, you’ll enjoy the increase.

In the UK, implementing the new Personal Savings Allowance 2016 allows taxpayers to earn £1000 in interest tax-free. Although tax is a considerable concern, saving enough money can earn you high returns and attract less tax.

7. Outsource the Tasks You Can’t Handle

Almost everyone has a task they dread to handle. As a business owner, you can outsource professionals to handle tasks that take away your joy in the business. It may be the payroll, balancing books, tracking marketing campaigns, or creating content for the company. Fortunately, third parties can handle these tasks at a fee. Ensure you find the right professional for the job for a good ROI.

8. Boost Findability Through SEO

Most startups launch companies without a website. However, it’s time to create one now that the business is making profits. Spend time, money, and energy building a website that impresses search engines to appear top in SERPs (Google Search Engine Result Pages).

Search Engine Optimization may be a challenging practice since you need to learn the ropes. But once you get the hang of it, it will propel your business to new heights. To start, you can outsource an SEO expert and learn.

With the proper knowledge of SEO, it will boost the findability of your business online with a significant return on investment shortly.

9. Pay Up Debts

Debts in a business may be inevitable, and you must look for ways to manage them.

When your business is steady and the debt is inexpensive, it’s not a priority for investment. However, for a more ‘feast and famine’ business, you may struggle to manage debt when facing slow trading periods.

In this scenario, paying off the debt may be the sensible thing to do and get it off the table.

As a result, you reduce operating costs, free up more capital, and build business resilience. Consider applying for a Change card as a backup plan for a business looking to earn interest and remain credit-free.

10. Take Time Before Diversifying

Most budding entrepreneurs are tempted to diversify their investments too early, which may be a poor business decision. You may go for 401k plans, but that’s not a good decision for your first profits. WHY? Your business needs those dollars to grow and make more profits.

Stocks and bonds are a great way to earn, but building your empire is more important for a startup.

To ensure you make a suitable investment for your first rewards, don’t jump to new ventures; begin with a familiar territory. Concentrate on your business and invest the money in an area that needs a lift for the better.

Diversification into other ventures can come later, but for now, reinvest in your business, yourself, or the team to help your profits grow organically.

Why Do Companies Invest Profits?

Reinvesting profits into your business is an intelligent way that opens doors to the following:

• Increase production
• Invest in systems and technology that boost efficiency
• Recruit and keep more skilled employees
• Expand the business
• Increase your product or service range
• Drive growth by investing in sales and marketing

How you invest your business profits will depend on the goals you have at that particular time. Let the investment money go into supporting your business goals to success. For instance, if you want to grow your business, invest in new equipment or technology that will allow you to take on new business.

You can also boost your workforce’s morale and productivity by increasing their salaries or awarding bonuses. Technology can help with automation and efficiency, reducing costs while improving profit margins.

Frequent Asked Questions

How can I earn money by investing in the UK?

You can earn revenue in the UK by investing in a plan that provides regular payments. For instance, company shares will pay dividends, while bonds will pay interest.

What is the best way to invest in the UK?

The best way to invest in the UK is through Stock and shares ISAs as they’re tax-efficient investment accounts. The money generated within ISA is tax-free, making it an ideal investment for the long term.

Where can I find most millionaires in the UK?

You’ll find most millionaires in London’s poshest areas, such as Mayfair, Chelsea, and Kensington.

In Summary

Investing puts money somewhere, hoping it will appreciate over time. There are many intelligent ways to invest your UK company’s first profits, such as the business, yourself, the team, or outsourcing where necessary.

It may not be wise to gamble with your first business rewards, but if you feel confident, UK short-term investments are the way to go. Your money can be invested for years or fast to avoid losing your money. Hence, you should evaluate the different investment opportunities and the risks involved.

Investing in business profits is welcome, but you should ensure a safe cash buffer. The surplus cash is vital for the business since you never know what emergency needs may arise, especially when you have employees. Liquidity is like a backup account you can access as working capital whenever you want to cover costs. Do you need more help on smart ways to invest your UK company’s first profits? Kindly contact one of our experts here.