How to know if your business is making money
The cash register is ringing like it’s 1989. But are you bringing in more than what you're spending on your business? This is where a Profit and Loss statement (P&L) comes in.
A P&L statement gives you the details on your revenue, expenses, and ultimately, your profit. If the bottom line shows a positive number, you're making profit. If it's got a minus sign in front of it, it's time to figure out how to increase revenue, decrease expenses or both.
Use our free Profit and Loss statement template if you’re not keeping one already. Update it monthly so you can track your progress and make better financial decisions.
3 unsurprising things to do with your business profits
Turning a profit is a milestone worth celebrating. But what comes next? Does your business plan lay out how those profits are used? Here are some suggestions that should come as no surprise.
1. Save
Open a Business+ Saver so you can earn interest on your profits. It also makes managing your business finances so much easier by setting aside money for specific purposes like tax bills and staff Christmas parties.
Think of your business savings account as a financial safety net. It'll come in handy when unexpected expenses pop up. Plus, it's a step toward financial security for your business. Even if you're a one-person show, saving a portion of your profits can help you feel more in control and less stressed about money matters.
2. Pay off debt
If your business has accumulated debt (and most do in the early stages), using your profits to pay it off can help your cash flow and your sleep.
If you’ve got lots of smaller debts hanging around like flies at a barbeque, consider an unsecured business loan to consolidate them rather than using your profits.
Having one loan to pay off rather than many is easier to manage, can improve your credit report and reduces the stress of having multiple debts.
3. Grow your business
You've worked hard and the profits are a result of your dedication. Now, for the fun part. It's time to grow by reinvesting some of those funds back into your business.
Here are some ways to grow your business using your profits:
Hire more help
If you've been juggling multiple roles, it might be time to hire an extra pair of hands so you can concentrate on what you do best.
Expand your product line
Consider diversifying your business with new products or services. This can help you tap into new markets and attract a broader customer base.
Marketing and advertising
Carefully crafted and targeted marketing messages can help you reach thousands of new customers. Consider paying a social media marketer to give you the best chance of reaching the right audience at the right time.
Improve your infrastructure
Upgrading your equipment or premises can increase efficiency and productivity. You can borrow up to $50,000 with a Business+ Unsecured Loan. Just download the Great Southern Bank Business app, apply in less than 20 minutes, and avoid all paperwork.
Just remember, not all profits should be reinvested. Having some money behind you is vital so you can ride the ups and downs of small business life.
When your business starts making money, it's a cause for celebration. But it's also an opportunity to make clever financial choices that can shape the future of your business.
By saving, paying off debt, and investing in growth, you're setting yourself up for even greater success.
Remember to check out our Business Hub . You’ll find heaps of free resources and plenty of helpful information to keep your business humming.
