What percentage goes back into your small business versus the percentage that you keep?
Upon writing a BUSINESS PLAN, these numbers would reveal itself and indicate if your business is capable of maintaining itself. You have to input the numbers for salaries, operational costs, expenses, etc. Put together, you'll have a financial picture of success, weaknesses, strengths, etc. A ideal business will have in-coming revenue that exceeds the expenses.
Pretty much at most 20% goes back into my physical business. Usually less.
Online-wise with websites, maybe 10%? 45% for those that sell physical products I'd imagine.
Last year, approximately 10% of my pre-tax business income went on things such as IT support, software and hardware, telephone and accountant's fees.
I had no spending on postage, raw materials etc, because my output is my intellectual work. I also had no spending on advertising/marketing/promotion, because I get more work than I can accept anyway.
Tax ate up about 20% of my business income.
It is important to invest back in the business, even though the costs are not that huge when you are running an online business.I keep 50% and invest 50%.
80% of monthly profits I put back into the business to allow for quicker growth and expansion, including paying employees, reinvesting in merchandise, location rent, promotions and advertising, 10% goes to the fattening up of the "nest egg" : - ) , finally 10% is used for everything else to pay "obligations" like personal bills , home rent and utilities, groceries, etc.
Once every 4 months (Apr, Aug, Dec) I reverse it to only 20% reinvested back in to the business and 80% for everything else as mentioned. Which 50% gives the nest egg a nice boost and only 30% is used for "obligations". These 3 months are also the most profitable for me, which is why I chose them for my system. End of school, back to school, and of course, Christmas.
However since 30% of profits is triple the usual amount I use for bills and such, it works out to be very rewarding and satisfying to enjoy the "extra cash".
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