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05 - Business Operations Management, P&L Control & More

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  #1  
Old 02-24-2006, 11:54 AM
katrika katrika is offline
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Default Money back into the business

What is a good percentage of income that a new business owner should put back into the business? What percentage of draw should the owner take?

Thanks
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  #2  
Old 02-24-2006, 12:00 PM
vangogh
 
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I think it might depend on your own situation. Maybe there is some kind of standard I really don't know. To me it depends on how much I need to pay the bills and then I'm trying to put the rest of the money back in the business.

Since my business is still young and I'd like to see it grow I want to put as much back into it as I can. I'm happy to go without a few things in my personal life now if it will help ensure I won't have to go without them in the future.
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  #3  
Old 02-24-2006, 12:15 PM
vaspot vaspot is offline
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Quote:
Originally Posted by vangogh
Since my business is still young and I'd like to see it grow I want to put as much back into it as I can. I'm happy to go without a few things in my personal life now if it will help ensure I won't have to go without them in the future.
That pretty much sums it up for me!
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  #4  
Old 02-24-2006, 12:23 PM
vangogh
 
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For me some of my customers are paying with a credit card which gets directly deposited into my business account and others are paying me by check. I've been trying to pay all the bills with the checks and leave the credit card payments in the bank for business use.

Very unscientific I know, but at the moment it seems to be working. There are some things I'd really like to purchase for my business which I think will be critical to making it successful so I'm doing what I can to build up the cash for the purchase sooner rather than later.

If it means a few less nights out on the town and a few less pizzas delivered to my front door I'm fine with that.
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  #5  
Old 02-27-2006, 07:29 AM
Alligator Alligator is offline
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As I have another job, I put all the money from the business back into the business. But it really gets me down when I think of all the money I am putting back into my business and not transferring to my personal account
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  #6  
Old 02-27-2006, 10:24 AM
cbscreative
 
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In your situation tpcp, that is a smart thing to do. If your job is supplying your needs, then the only way to build your business is to keep putting the money back into the business. Like vangogh said, do without so it won't always be that way. The thing that separates business owners from consumers is their willingness to practice "delayed gratification."

I agree that a percentage may not be the answer to this question. To say "as much as possible" may seem simple, but that the most appropriate answer. Don't ignore that putting back into the business should include a savings buffer to get you through any dry spells.
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  #7  
Old 02-27-2006, 11:14 AM
The Old Sarge
 
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I agree with the others.

But I'm also fortunate enough to have an income I can live on without dipping into my business at all. My brother is similarly set. All our money from the business goes right back into the business. Sure, I could have a new truck, a new car, a bigger boat ... but I'm trying to build my business into something much bigger ... my dream of independence. Why should I settle for that new truck now when I can parlay it into a second home in the mountains in a few years AND the new truck?

Since my brother and I started our busines/es, we have invested roughly $20,000 ($10,000 each) out of pocket. That is spread out over a few years, so it never really hurt either of us. We have never taken a dime out of the business except to pay the business's expenses ... utilities, office supplies, accountant and lawyer fees, etc. We have worked and slaved and not "paid" ourselves anything. We have multiplied our initial investment many times over and the cash is sitting in the bank and invested in cds.

The day will come when we have "funded" all our "plans" and "expansions" and will begin to take our hard-earned shares. By then our shares will be much larger than they have been at any point up to now. Timing is everything. Be patient.
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  #8  
Old 02-27-2006, 01:37 PM
vangogh
 
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For me I'm just putting as much as I can into the business. I know the money is there if I absolutely need it, but not having it in my personal account gives it a greater chance of staying in the business.

I'm still essentially saving in the business account so the money is still there for me. Once I get the account up to a certain amount to make me feel more comfortable I'll start spending the money on some things I want and need for my business. There are also some specific things I'm saving for.
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