Are You Taking Too Much Money Out Of Your Business?
When business is good people spend more, and sometimes it gets to the point where it becomes a habit of spending more than the business can support. Also, many times people think it's OK to spend money because, "I will be making big money soon." Expect that "soon" is usually longer than expected and sometimes doesn't even come at all.
Here are some tips for spending the money you earn from your business:
1. If your business can survive without it, don't buy it.
2. If it doesn't make you money, then don't buy it.
3. Make a deal with someone close to you like a friend or your spouse. Ask them to hold your check book for you and every time you need money you have to go to them and ask for a check. For each check you must give a good reason for spending the money. This may seem silly but try it and you'll find yourself only attempting to purchase necessities.
4. Remember that you should only be using a portion of the profits from your business. Some people get mixed up between revenues and profits!
5. Keep in mind you have to pay bills and taxes.
6. Create a system where every dollar that comes in has a place to go.
For example: You average 35% net profit from all revenues.
So could simply calculate 25% for yourself, 10% of your profits for reinvesting in the business, and the other 65% of all revenues is not your money but belongs to the business for the purpose of paying bills. Obviously this plan can be set up in greater detail, but this simple example illustrates the point.
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