How Much Does A Small Business Owner Make?
How Much Does A Small Business Owner Make?
If you are a small business owner, you probably have a financial target in mind. This target is the amount of money that you would like to make. However, meeting that goal can be harder than you think. The reason is that much of your money will be swallowed up by the business overhead. Many small business owners do not fully understand the financial side of business ownership. However, when you understand your financials, you'll be better equipped to make sure that you earn enough money to keep your business running, and to put food on the table, and to invest for the future.
So provided here is a guide to determining how much money you actually have. How Much Do You Bring In? In order to start figuring out how much you make, you will first need to figure out how much your company actually brings in. If you have a good bookkeeping system, this should be fairly easy. However, many business owners when asked "what's your company's revenues?" will hem and haw and "ballpark it". (And in my experience, the amount they give is much higher than reality).
If you can state exactly what your company is generating in revenue, that's great. But if you can't, or if you're brave enough to admit that your bookkeeping is Mount Everest of scrap papers and receipts, you might need to invest in a bookkeeper or bookkeeping system to help. While business owners might balk at the expense (because a bookkeeper doesn't seem to bring in revenue), they might be surprised to discover just how much money they can actually earn because they have a bookkeeper: Expenses are often reduced and the owner's time is freed up from administrative tasks.
Once you have determined how much money your business brings in, you will need to determine how much the company spends each month.
How Much Do You Spend?
Before this question is answered, let me recommend (is there a stronger word than recommend?) that you separate business and personal expenses. Not only will this give you a more realistic view of the health of your business but the good folks at the IRS will appreciate it, too. Business expenses come out of business revenue. Personal expenses come out of the wage you earn from the business.
Once your bookkeeping records are well-organized, it should be fairly easy to determine your set monthly business expenses.
Your next step is to subtract your expenses from your income. In theory, the result is your monthly personal income. However, it is not quite that simple.
Smart business owners know that, aside from buying the products and services they need to keep their business running today (expenses) they also need to make additional purchases to build for the future (these fall into the expenses category but I like to think of them as investments), and, they need to reserve some money to help keep them operating in the future (operating capital). You need all three to run a successful company. If you take one away, the business could cease to operate! However, at different times, some will be higher than others. In the first years, you might have higher expenses as you buy things you need to run your business and you might willingly accept a lower personal pay in order to have some operating capital, too. Then, over time, you'll want to increase the amount that you invest in your business for the long term.
Revisiting the question
So, how much money do you make? Many business owners estimate a number that is far too high. However, by getting a handle on your finances and then by making sure that you're paying the right expenses, you're investing in your business, and you have some operating capital, you'll build a stronger, longer-lasting business. And the more you do this, the more you'll make.
Over time, your income will steadily grow, but so will the value of your business. Some day, when you look to exit your business, you may be able to sell it as a high-value asset. Now you know how to get there.
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How Much Does A Small Business Owner Really Make?
If you are a small business owner, you probably have a financial target in mind. This target is the amount of money that you would like to make. However, meeting that goal can be harder than you think. The reason is that much of your money will be swallowed up by the business overhead. Many small business owners do not fully understand the financial side of business ownership. However, when you understand your financials, you'll be better equipped to make sure that you earn enough money to keep your business running, and to put food on the table, and to invest for the future.
So provided here is a guide to determining how much money you actually have. How Much Do You Bring In? In order to start figuring out how much you make, you will first need to figure out how much your company actually brings in. If you have a good bookkeeping system, this should be fairly easy. However, many business owners when asked "what's your company's revenues?" will hem and haw and "ballpark it". (And in my experience, the amount they give is much higher than reality).
If you can state exactly what your company is generating in revenue, that's great. But if you can't, or if you're brave enough to admit that your bookkeeping is Mount Everest of scrap papers and receipts, you might need to invest in a bookkeeper or bookkeeping system to help. While business owners might balk at the expense (because a bookkeeper doesn't seem to bring in revenue), they might be surprised to discover just how much money they can actually earn because they have a bookkeeper: Expenses are often reduced and the owner's time is freed up from administrative tasks.
Once you have determined how much money your business brings in, you will need to determine how much the company spends each month.
How Much Do You Spend?
Before this question is answered, let me recommend (is there a stronger word than recommend?) that you separate business and personal expenses. Not only will this give you a more realistic view of the health of your business but the good folks at the IRS will appreciate it, too. Business expenses come out of business revenue. Personal expenses come out of the wage you earn from the business.
Once your bookkeeping records are well-organized, it should be fairly easy to determine your set monthly business expenses.
Your next step is to subtract your expenses from your income. In theory, the result is your monthly personal income. However, it is not quite that simple.
Smart business owners know that, aside from buying the products and services they need to keep their business running today (expenses) they also need to make additional purchases to build for the future (these fall into the expenses category but I like to think of them as investments), and, they need to reserve some money to help keep them operating in the future (operating capital). You need all three to run a successful company. If you take one away, the business could cease to operate! However, at different times, some will be higher than others. In the first years, you might have higher expenses as you buy things you need to run your business and you might willingly accept a lower personal pay in order to have some operating capital, too. Then, over time, you'll want to increase the amount that you invest in your business for the long term.
Revisiting the question
So, how much money do you make? Many business owners estimate a number that is far too high. However, by getting a handle on your finances and then by making sure that you're paying the right expenses, you're investing in your business, and you have some operating capital, you'll build a stronger, longer-lasting business. And the more you do this, the more you'll make.
Over time, your income will steadily grow, but so will the value of your business. Some day, when you look to exit your business, you may be able to sell it as a high-value asset. Now you know how to get there.
How Much Does A Small Business Owner Make - To learn more about this author, visit 's Website.
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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George LudwigGeorge Ludwig is a recognized authority on sales strategy and peak performance psychology. An international speaker, trainer, and corporate consultant, he helps clients like Johnson & Johnson, Abbott Laboratories, Northwestern Mutual, CIGNA, and numerous others improve sales force effectiveness and performance. Though it's George's strategies and processes that help corporations increase productivity and performance, it's his tremendous energy and dynamism that spark the transformation. Again and again, clients remark on his amazing ability to unleash human capacity and inspire men and women to break out of their comfort zones. The result is a whole new type of salesperson. His customized presentations teach achievers to make stunning advances in their lives. From helping salespeople realize cherished dreams to helping corporations exponentially accelerate revenue streams, George Ludwig leaves audiences and individuals empowered, emboldened, and clamoring for more. George is the best-selling author of Power Selling: Seven Strategies for Cracking the Sales Code and Wise Moves: 60 Quick Tips to Improve Your Position in Life & Business. - Visit George Ludwig's Website |
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John AlexanderJohn has taught keyword research and SEO skills to small groups of business owners and Webmasters from over 80 different countries world wide since 2002. John is also the Director of Search Engine Academy ; Co-director of Training at Search Engine Workshops offering live, SEO Workshops with his partner SEO educator Robin Nobles, author of the very first comprehensive online search engine marketing courses at SEO Training Online and the SEO Workshop Resource Center. I look forward to hearing from you! - Visit John Alexander's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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