As the business owner, you are responsible for what you do with your business profits. After all the employees are paid, suppliers have been given their money, and tax has been taken off, you’re left with the profit. You’re totally free to withdraw this money and put it in a bank account, giving yourself a pat on the back for some work well done.
Or, you could go down a different route: corporate investing.
What is corporate investing?
Corporate investing is just like regular investing, only you use your corporate profits to do so. Instead of pocketing the extra cash, you invest it in something else. Why do this? Well, it can help you make more money from the money you’ve already made. It also means that you don’t just have lots of cash sitting in a bank account doing absolutely nothing. The chances are you will never spend all of it, so it sits there for months or years gathering metaphorical dust. Investing will help you generate even more money in the future.
How can you invest your business earnings?
You could invest your earnings back into your company. Some businesses do this as a way of being self-sufficient and growing. You’ve made a lot of money, so why don’t you give back to your business and pay for something that can improve it. This might mean you invest in new equipment, resources, or possibly a new office.
Alternatively, you can invest the money in your employees. Give them bonuses or raises, treat them to something nice. You may see this as a needless expense, but it’s an investment because it raises employee morale. Having high morale in your company will mean that people enjoy working for you. Thus, they work harder, better, faster, all the time. They know that working hard yields rewards, so they’re likely to keep doing so while sticking around for the long haul.
Thirdly, you could opt for a more traditional way of investing your business earnings. Instead of looking at your company, you can invest in things like stocks, bonds, pensions, commodities, etc. The benefit of owning a business and using your profits is that you will likely have a lot of money to invest. This can mean you qualify for the minimum investment for asset management companies like Fundamental Global. Companies like this pool funds from numerous investors and invest in a diverse portfolio for you. You can sit back and let the returns grow, focusing on your business.
There is one key thing to understand when you pursue corporate investing. When we talk about investing your profits, we don’t necessarily mean you invest all of them. Some of the money should be pocketed or you won’t ever make any money yourself. You could then use a portion of the money to invest in your business or other assets – it’s totally up to you. The whole point of this idea is that it helps you do something with the money you’re earning. Yes, it’s nice to see a big figure in your bank account, but you should never keep too much money in there as it will be a waste!