A lot of small businesses don’t have a fixed salary for their owners. They think the profit should be their salary so they don’t include that in pricing etc.
(I’m reposting this old post again, as I see this again and again)
But most businesses are not profitable or do not generate profit for nearly 4 to 8 months in any given year! Hence they have to pay themselves less or even none for a large part of a year. Also when they earn good profits (2 – 4 months in a year), owners spend most of it on their personal expenses and couldn’t keep it for any investment in marketing etc needed in other times.
What we suggest and implemented is start including a fixed salary for owners in your cost. And then try to earn them. And then the extra left should be considered as profits and should be kept for future expenses and investments. That’ll help you become profitable easier and will make your life simple.
The small businesses who could invest in tough time on marketing etc are the ones who earn the highest profit and never had to take much of a loan.
But at the same time who couldn’t invest in tough times are the ones who gradually grow their losses.
So work intelligently and earn a salary for your betterment.
(NB: From nearly 1200 small businesses around the world)
It’s the 27th of March. Our metrics and my survey are again out.