Clever Ways to Spend Your First $100K From Your Small Business

A small business may look nothing special, but it cost blood, sweat, tears, not to mention money to build it. Some entrepreneurs might’ve even gotten into debt to start it. That’s why every time you support a small business, you also change the lives of its owners.

Earning $100,000 can be as good as winning the lottery for a small business owner. That money opens plenty of possibilities for them, a few of which traveling, renovating their homes, sending their kids to school, or sending themselves to university. But $100,000 shouldn’t be spent carelessly. Sure, those ventures look like investments, but if you don’t really need them, then you might as well have thrown your $100,000.

If you want that amount of money to improve the quality of your life, or to sustain you for the years to come, consider these wise ways to spend your first $100,000 business earnings:

1. Buy a New Home

$100,000 isn’t usually enough to buy a home, so get an affordable mortgage loan, and use your $100,000 for your down payment. If you have more cash to add to your $100,000, use them up too.

You can also try a strategy home-buyers are adopting lately, called “cash first, mortgage later“. In this strategy, you’ll finance your new home with a mortgage, but delay the progress until the sale is final. There are drawbacks to this strategy, though, and that’s the collateral. Your collateral’s value can change without notice, putting you at a disadvantage.

2. Invest in Stocks

The stock market can be intimidating if you haven’t explored it yet. But once you get the hang of it, you’ll keep investing in it. Buying a company’s stocks makes you a part-owner or shareholder of that company. It entitles you to dividends, which are the stocks’ earnings.

Historical data has proven that stocks provide one of the best returns on investment. But there would also be times when your stocks might decline, such as in a recession. The COVID-19 pandemic had a significant impact on the stock market, particularly during the lockdowns.

Still, returns from stocks are generally favorable. From 2009 to 2017, the annual rate of average returns had been steady, except in 2011 and 2015, which were both rough years in the stock market. Just keep your money in your stocks when the market falls, because its value will surge again when the economy recovers.

3. Create a Retirement Account

Your young age shouldn’t stop you from investing in your retirement. Create a retirement account now, and deposit a chunk of your $100,000 in it. Make it a habit to contribute to that account from then on.

These days, you need at least $2 million to retire comfortably. But you may need more, considering the unprecedented things that can happen to the world, like the pandemic. To make yourself more inclined to save for your retirement, consider a 401(k) or IRA. Those retirement accounts have tax benefits.

4. Grow It

Aside from stocks, freelancing, another business, or other investments can also grow your $100,000. If you’re not too busy, maybe you can explore ventures that use your talent. So try freelancing to make more bucks.

Growing your business or starting another one has compelling benefits, too. $100,000 can be a decent capital, which you can use to enhance your products or services. But if there is no demand for such, opening another business for a completely different audience may be a better option. Just don’t do it without considering the risks. Even if you’re already an experienced entrepreneur, the success of your new business isn’t guaranteed.

5. Spend it on Experiences

If you really want to spend your $100,000 on things that’ll make you have fun, don’t be discouraged by the people who say you should only buy assets. While growing your money is generally the more sensible option, it’s your money we’re talking about at the end of the day. As such, you should feel free to decide where you want to put it. As long as you won’t fall behind in your bills after spending your $100,000, then you’re good.

Consider buying an RV if you want to travel. An RV will cut down your expenses on accommodation and guided tours. However, RV living may not suit you if your business requires your physical presence constantly. So don’t decide on travel matters like this on a whim.

But if you’re really craving a holiday, just book a long vacation instead. Visit the places you’ve been dreaming to see and eat the food you’ve been curious about. Travel may be a depreciating asset, but if it changes your life for the better, then it’s worth every penny. Experiences are still investments, after all.

Besides, you can earn $100,000 again as long as your business continues to thrive. So treat those hefty earnings as a motivation to excel further as an entrepreneur. In time, you may find yourself earning $100,000 every month.