Join Eddie Davila for an in-depth discussion in this video What to do with sales revenues, part of Business Foundations.
- Success is great. But now what? In many cases, many companies work so hard to break even that they never even imagine what to with the profits. And strangely, the more profits that there are, the more questions there will be about how to use them. That's why the best companies plan for success. They already know how they'll use the profits, or at least, they have ideas. In some cases, the answers are easy. If profits were promised to investors, you may need to distribute some of the funds.
And if you have lots of investors, you may need to figure out who gets paid first. It's also possible that some investors may look to divest once the company is turning a profit. So the company might have to be prepared to give the investor back their entire investment plus any appreciation in their share of the company. If you didn't get your money from investors, you probably borrowed money for this or other ventures. You may want to pay off some of these debts.
The government, they always want their cut, too, so your company needs to plan to pay taxes on those profits. And let's not forget about the people that made this success possible. How do you think your employees feel when the company starts generating profits? Proud? Happy? Excited? Relieved? Yeah, probably. But they also probably feel like they deserve a reward. Is your company prepared to pay out bonuses to keep employees happy, and keep them energized for the next few months? And while bonuses are great, some want something more permanent.
Perhaps a raise, or a promotion. Maybe education incentives. Or employees would just like to see the offices improved. And don't forget that your competitors will try and steal away your best employees in an effort to copy your success. Are you prepared to pay up to keep those employees? Perhaps you still have money left over. What else could you do? Well, you might want to continue to grow this opportunity. Investing in more people, facilities, and materials may be required.
You might need to invest in research and development, innovating this product or service. Or perhaps developing new products and service offerings. It's also possible the company may want to invest in other companies and their new business ventures. And some companies even want to share their good fortune with others by giving to charities they believe in, or investing in the communities where their employees live. And sometimes, they provide special offers and rewards to their customers.
But the reality is the best companies do not distribute, donate, or invest all their profits. Saving some of that money is an option. Times may be good now, but we never know what lies ahead: a bad economy, new competitors, new business opportunities. Having accessible cash in a company savings might be the key to comfort and happiness in the future. The world of business is filled with risk and failure. Any good businessperson knows that, and thus, they prepare to deal with adversity.
But the best business people not only survive the day-to-day struggles of business, they are also prepared to deal with success. Is your company prepared for the challenges that come with success? If not, you're success may be very short-lived.
He also reviews the basics of the people side of business: managing employees and developing customer relationships. Last, he covers the financial and information management aspects of business and provides a basic explanation of economics, so that you can understand the relationship of your business to the bigger picture.
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- Understanding business goals, stakeholders, and resources
- Developing a product or service
- Selling a product or service
- Raising capital
- Managing employees
- Managing customer data
- Understanding finances
- Managing resources
- Understanding economics