By October 11, 2022
Financial stability is the foundation of a successful business. Developing a solid foundation for your business means understanding not only where your money comes from but where it is going. Here are 5 things to think about when you are looking where your money is going.
Bringing more employees onto your team is challenging. Managing the payroll is even worse. How should you manage your payroll? How much is reasonable to pay for payroll as part of your expenses?
The standard recommendation is between 15% and 30%, but that doesn’t mean that those numbers are right for your business.
Tools aren’t cheap.
But in a business like yours, where time is a bottleneck for your income, having the right tools can save time and increase productivity. Proper equipment can also decrease errors and frustration. But how much will that cost?
The numbers are very subjective. Some diagnostic equipment can have a high up-front cost, but also good long-term money making potential. Other tools have a lower cost, but are far more affordable. On average, you probably shouldn’t spend more than 10% of your revenue on new tools.
Expenses is a broad category that covers what we’ve talked about already. All told, your expenses shouldn’t exceed 70% of your revenue, though it’s better to have lower expenses than 70%.
With the economy continuing the downturn it began last year, it’s more important than ever to lower your business’s expenses.
The part we all hate is giving our hard earned profits to the government as taxes. Most small businesses pay between 20 and 40 percent of their net revenue in taxes. Tax planning can make a tremendous difference.
Where Do You Fit?
Most importantly of all, where do you as the owner of the company fit? When do you get paid? So many of the business owners I help struggle to pay themselves at first. My goal is to help you make your business successful so you can pay yourself for all the work you’ve done.
You can get paid for what you do and love doing it at the same time. The only question I have for you is simple.
How much do you want to make from your business?