When you own a business, you typically have three good options for what to do with the profits: Invest for growth. Invest for margins. Build up your cash reserves.
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Investing for growth is a good plan when the market you are in is expanding and competition is fairly low and you want to lock in more market share before competitors catch up and take it for themselves. Watch out for "growing yourself out of business" due to low marginal profit
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Investing for margins is good when the market you are in, is static or shrinking and competition is high. This can mean improving training for your staff, or modernising your tools to enhance productivity. This may mean laying some people off.
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Watch out for laying too many people off and losing critical organisational knowledge and/or growth potential. Also be wary of getting too sentimental and pursuing growth opportunities with poor marginal profit as an alternative to laying people off.
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Building up your cash reserves is really unsexy these days because saving is practically a swear word these days. Truth is, few businesses are consistently profitable and being able to avoid the shitty interest rates on short term business loans is great.
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Watch out for getting complacent and being stuck in a (temporarily) profitable holding pattern without proactive plans for how to invest for future. If you're building up cash because you can't think of anything better, you might want to hire a consultant.
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Replying to @BeigeShiba
Money holdings should be diversified and growing in relatively safe investments with at least 20% in cash or cash equivalents for liquidity.
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Replying to @MikeAshe69
I don't have any general advice for investing cash in market speculation because I'm flat out bad at it.
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Replying to @BeigeShiba
Speculation is one thing, investing in managed funds(i.e. index matching funds) or bonds is another.
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Replying to @MikeAshe69
Those are less risky options if you have a bunch of money burning a hole in your pocket. You're still speculating, just now speculating on the market instead of against the market. Still "picking up pennies in front of a steamroller" behaviour, IMO.
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Taleb's term for making big bets, with small returns, against an unlikely catastrophe.
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Replying to @BeigeShiba @MikeAshe69
As a long term investment strategy, anything of that nature tends to have crummy performance.
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