Where Does Your Money Actually Go?
A SIMPLE FRAMEWORK FOR BUSINESS OWNERS
Most business owners I talk to are making decent money. They're busy, they're billing, things seem to be moving.
But at the end of the month? They have no idea where it went.
It's one of the most common things we see. Revenue looks fine on paper, but there's still this low-level financial stress that never fully goes away. The problem usually isn't how much you're making. It's that no one ever showed you how to divide it up.
Here's a simple framework to start with.
The Three Buckets
Think about every dollar that comes into your business landing in one of three places: expenses, taxes, and profit. Not an exact science, but a structure you can actually use.
Expenses: 40 to 60% of revenue
This is what it costs to run your business. Software, subscriptions, marketing, contractors, and rent. If this number is creeping above 60%, it's worth taking a closer look at where the money is going.
Taxes: 20 to 30% of profit
This is the one people skip, and then they're surprised in April. Set this aside as you go, ideally into a separate savings account you don't touch. Treat it like it's already gone.
Profit: 10 to 20% of revenue
This is what's left after expenses and taxes. Profit is what lets you pay yourself consistently, invest back into the business, and actually build something instead of just staying afloat.
What This Looks Like in Real Numbers
Say your business brings in $8,000 this month:
$3,200 to $4,800 covers expenses
$1,600 to $2,400 gets set aside for taxes
$800 to $1,600 is yours to keep as profit
When every dollar has a purpose, the stress of not knowing where things stand starts to lift. You stop making decisions based on what's in your checking account and start making them based on what's actually going on in your business.
A Note on These Numbers
These ranges are a starting point, not a rule. Your percentages will vary depending on your industry, your overhead, and where you are in your business. A product-based business looks different from a service business. A newer business looks different from an established one.
But if you've never thought about your money this way before, this is a solid place to start.
Need Help Getting Your Numbers Organized?
If you're not sure what your numbers look like or your books aren't current enough to even know, that's exactly what we help with. Clean books are the foundation. Everything else builds from there.
Reach out if you'd like to talk through where things stand.