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My Business Needs Cash - 3 Ways to Improve Profit Distributions

3 ways to Improve Profit Distributions

Truth is Profit should not be a one time event at the end of the year. How often do business owners wait till their accountant tells them how much net income was left over from their business activities. They then look at their bank account and say “where’s the profit my accountant speaks of?”

I order to solve this problem, Profit needs to be an investment throughout the year.

Set up a business account nicknamed profit. Setting aside funds on a regular basis from your business activities ensures you are improving the health of your business

Determine an appropriate amount of profit to set aside on the 10th and 25th of each month. A healthy business should set aside 10% of their revenue collected between the 10th and the 25th. An outstanding business may be able to put away 15%. If these %’s are too much. Start with 1%. Any business can find 1% to start.

Quarterly, pay the business owners 50% of the profit account as a bonus to their normal salary. It’s important to get paid for what you do in the business, but even more importantly as an owner of the business.

Make profit a regular occurence in your business. You will earn more and opportunities only come to businesses that have cash.

 

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