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Reinvesting in Your Online Business

Once your business is profitable, you may want to do what I do and suck all the cash out of the business to pay off your mortgage and other bills.

But, there comes a point when you need to consider how big your business is going to get without re-investing some of the profits back into the business.

All businesses have expenses. For online businesses that can be hosting/domain names/autoresponders and suchlike.

But in addition to those "fixed" expenses there are "discretionary" or "optional" expenses such as "do I employ someone to do that job so it frees me to do more important tasks" and "do we pay for that advertising campaign or not"?

You need to weigh the affordability of the optional expense against the potential returns.

If hiring someone for $20,000 per year frees you to do more consultancy which makes you $100,000 per year, then it makes sense. Similarly, the ad-campaign which costs $2,000 but makes $12,000 is also a good investment.

Optional expenses are still expenses, and will be deducted from any company profits, so no taxes are paid on them. Looking at it that way, it's a very easy way to exponentially grow your business.

If you can wait for the profits, that is. :-)

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