Is it wise to invest all the profits back into the business?

[hastral45]

I read somewhere that if you want your business to quickly build up in capital, all profits made should be re-invested back into the business. This is called compounding in business world.
However, it is not advisable to put back all your profits in the business. Some part of it should be set aside for future contingency not budgeted for. The owner of the business should also take some of it as his gains to run his personal expenses. It is not good to be using capital or gross profit to be running expenses. Parts of the profits should also be committed into savings while the rest can now be plough back into the business.

 

[Springtime]

I think it is not wise to invest all the profits back in the business. A portion of the profit can be distributed to shareholders. You should also keep a portion for contingency use.

 

[fcbetting]

Maybe in first year or second but in third you must start earn and get money out if it as profit. Best is in start cover loans and use profit to pay some bills in advanced. But in third year you must start see it as income and take part of money out.

 

[Shavkat]

At present, I personally think that it is not a good time to startup a business. It is because we are still coping up with this pandemic thing and the effects of it.

 

[hastral45]

At present, I personally think that it is not a good time to startup a business. It is because we are still coping up with this pandemic thing and the effects of it.

Business can be started at anytime without considering any phenomenon. I want you to know that every incident in life provides opportunities to start businesses that would provide solutions to that incident.
During the phenomenon of covid19, there were many business ideas that arose such as nose cover, methylated spirit, hand gloves etc.

 

[IB D]

It is not wise to invest all the profit back into business. Business is risk-taking. You might either loose or gain. It is better to save your profit than to invest to avoid losses.

 

[deucher]

Reinvesting all profits back into the business is beneficial to growth and expansion. However, it's important to balance reinvestment with other priorities such as paying off debt, saving for emergencies, and investing in your personal financial goals.

 

[AruneBend]

You should not invest all the profits. Many emergencies can happen, and businesses can always fail. You need to balance your finances, save, and do more to avoid problems that can occur.

 

[eldavis]

Though it is good to invest back into your business, but i do not think it is wise to invest all you have back into the business again, i believe it would be wise to keep some aside as extra. Your business needs to have emergency funds it can fall back to when things do not go as planned.

 

[AruneBend]

Though it is good to invest back into your business, but i do not think it is wise to invest all you have back into the business again, i believe it would be wise to keep some aside as extra. Your business needs to have emergency funds it can fall back to when things do not go as planned.

For me I can't imagine myself doing that you have to keep some because bussness can always fail and sometimes it's not your fault you need to understand that you need to be very careful with money and investing all profits in business can end up badly

 

[nomad]

It depends on your risk tolerance level. If you have high risk tolerance, investing all profits and growing your business can be very good idea

 

[fcbetting]

Currently I do that with my crypto stake. All stake profit I reinvest again in program. But it is not to big money so I can afford to lose it even I don't want that.

 

[King Belieal]

I am not in support of investing all the profits back into the business. The entrepreneur must pay himself from the business profits. It is very important.

 

[Fidelia]

If a business owner has something else that is fetching him or her income, investing all the profits into the business would help the business to grow rapidly.