When you can delay using the benefit you get early in a business. Your later return will be a lot bigger.
First, you need to know how much your profit is (when the expenses of your business is covered). If your expenses are higher than your income, you need to take action. Profit should never be negative.
Once you know the amount of your profit, then you set it aside. Use only what you really need. The rest you split it in two, reinvest one part wisely into growing your business and the other part you set aside as a security for bad days.
Knowing what you need and what you don’t is the difficult part in this. We all want the good life and knowing when we can afford it can become a real headache.
Start with the basic.
- Life expenses (internet, car, cloth, electric bill, cell phone, gas bill, assurance)
Once you know what you need to clear all the basics, you can have a good idea of what you can invest back into your business.
You have to set up monthly goal that you will use to celebrate your success. When you reach your goal, use a part of your reinvestment profit to celebrate. It will keep you motivated and you’ll still have something to invest back into your business.
Your security money should be easily available for emergencies. You’ll have to use it only when your business is not providing for itself. When this happens, you have to do an analysis and change what need to be changed so the next month it will not be as bad. The security money is there for emergencies. You should never use it two month in a row.