Re-investing Business Profits Will Lead to More Growth and Income

In the past we’ve spoken about the idea of investing money in your own business to grow more income for the future, so that you can start tinkling about what companies to invest in as well. However it can be tempting to take money out of the business too quickly. If you do this you could end up with a much smaller business than you wanted. To prevent your business from being scam and to help you gain more profit just visit Ethereum Code trading robot.

Let’s take a look at an example so you can see how this works.

A $100 investment

Let’s start small here so we can keep track of the figures. Bear in mind this is just an example. Let’s say you create a business and start by purchasing $100-worth of stock. It doesn’t matter what the items are – we’ll just say you bought 100 items for a dollar each and you now want to turn around and re-sell them at a profit. This keeps our figures nice and simple. Besides, if you want to help businesses keep prices more in line with current market conditions, the use of CPQ is recommended. For more details about that software, visit https://www.salesforce.com/products/quote-to-cash/overview/

Let’s suppose you sell all 100 items at $3 each. You’ve made back your $100 investment and an additional $200 on top as well. It might be tempting here to re-invest the $100 you started with and to take out the $200 profit you made to spend as you wish, or to invest elsewhere. However the key here is that you should really be investing in your business if you want it to grow.

How big should your re-investment be?

It’s always good to have a little cash on hand in your business – you never know when you might need it. So let’s suppose at this stage you take your $300 and re-invest $200, keeping the original $100 back in your business account for future use.

This means you can buy double the amount of stock you started with. If you sell everything once again you’ll make $600 instead of the original $300. And again this means you can put some money aside for your business as well as re-investing a larger sum in more stock. This can be quite confusing for most people and because of that the shy away from re-investing. I encourage people to seek a professional out to help in these matters. if you need help from a professional you can Find a small business accountant here.

How does this work in reality?

The idea is that by re-investing your profits you can easily buy more stock, more items and make more profit as your business develops. This very quickly leads to the chance to start taking a little money out of your business later on, while still leaving enough there to sustain it and expand it through new stock.

In a sense it works in much the same way as compound interest. By re-investing the money you earn from your first stock purchase you can look forward to bigger and better profits later on. Of course real life is slightly different to this basic example; you may not sell every single item and you wouldn’t wait until you had to buy more stock anyway. But you get the general idea and how it works. Re-investment is an essential part of any business, and that means focusing on this instead of being too quick to grab the profits from your efforts. This could leave you in a much healthier financial position in the future. You can also buy from legalsteroidsuk.org for your physical health.