How should I invest my business profits?

A question I get frequently from friends and colleagues is, “How did you invest your business profits?” The truth is, I didn’t think much about investing profits when I was running and growing my business. I simply didn’t have the time to do so, nor did I want to divert my focus away from the business.

Was this a good move? It’s hard to say, but I will say that a growing body of research indicates that human beings have a finite level of mental resources to devote to any task or pursuit. In other words, we can effectively focus on only a limited number of things at once.

Research also shows that intentionally limiting the number of decisions and tasks allows us to be far more effective at making those decisions and accomplishing those tasks. Our brain is simply not wired for multi-tasking.

For example, several well-known entrepreneurs have stated that they keep a “work uniform” (multiple copies of the same pants, same shirt, etc.) in order to minimize trivial and unimportant decision-making. I did the same thing. It’s one less decision I had to make in the morning.

Although I might not have maximized my returns, I’m confident that my single-minded focus on the business more than made up for any shortfall. In addition, I completely avoided the stock market crash associated with the Financial Crisis and The Great Recession. When running a business, who needs to worry about his or her portfolio losing half its value?

Finally, don’t forget that running a business is a form of investment in and of itself. Putting money back into a thriving and growing business that you control is never a bad idea.

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