# what percentage of my profits should i put back in the company?



## tang2 (Mar 2, 2010)

Hi, I'm new and i have a small t-shirt business named tang.

since i know that this website is full of experienced members, i was wondering how much percent of your profits you put back into your company, and how much i should put back into mine.

Thanks,
Grant


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## kimura-mma (Jul 26, 2008)

It really depends on what your goals are. Are you looking for a short term payout or are you looking to build a long term sustainable business? If the latter, expect to invest 100% of your profits for your first several sell-throughs.


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## out da box (May 1, 2007)

100%... or more.


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## splathead (Dec 4, 2005)

There is no set number. If you are just starting out, you won't see profits for a while. And when you do, your needs will dictate how much you will reinvest; new equipment, new processes, etc.


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## Cranky Dave (Feb 11, 2010)

I subscribe to the "pay yourself first" theory. Previous experience has shown that for me, I need to make sure that I'm seeing something back, in my pocket, from all my hard work. At the outset, it might be just a token 5% or 10%, pumping the rest of the profits back into the business. Then give yourself raises as you become more established.

That's the way it works for me...

Cheers, 
David


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## wormil (Jan 7, 2008)

I agree with David, you really should be able to pay yourself first otherwise what use is the business. Of course there are going to be situations where someone is really bootstrapping but generally, make the business work for you, not the other way around.


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## Curtis (Mar 9, 2010)

I have no experience with the t-shirt industry, so take my response lightly.

But as with any new company/business, its important to understand the other costs of operation that may be over looked. Money for advertising/marketing and creating a better product for your customers should always be considered, so try to set aside some sort of monthly minimum for that alone. As far as how much you should, it depends on how much you're currently making.

Do you think you and your company could benefit from a better website? A better e-commerce system? Do you know how to do that? If not, then that should also be looked into.

At the starting stages, you need to appeal to your, and attract more customers as much as possible without bankrupting yourself.


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## ambitious (Oct 29, 2007)

It all depends.. If you want your business to stay the way it started (small), i would say 50%. But if you want your business to grow and buy newer or better equipment or add more products, marketing, website etc, etc... I wouldn't even think about a profit till i reach and get to where i want my business to be.


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## IvanM (Mar 17, 2010)

Your business is in a sense your partner. In every business I have owned and sold in the past the business got an equal share as me for growth and I would leave enough for misc. expenses. So in my case I would always split money after overhead three ways. I would pay myself 30% pay the growth part of the comapny (not to be confused with marketing, that goes under overhead) 30% and pay the company itself 30% the last 10% was petty cash for anything (just in case).

Most people take 100% or even 50% leaving the company nothing making it really hard to grow. So the real question is how much money do you want to make? 5k a month? Okay so you have to crack almost 18k after overhead in order to take home that 5k leaving your company with 5k to expand a bit and get you to 22k a month in the next few months, thus making it now 6k to 7k you can take home.  Plus your company still has a large amount building up in savings from your 40% (The 30% and 10%) that just kind of sits. At the end of the year you can take some as a bonus. But never by any means be greedy and leave your partner to starve. Partner being your business.



tang2 said:


> Hi, I'm new and i have a small t-shirt business named tang.
> 
> since i know that this website is full of experienced members, i was wondering how much percent of your profits you put back into your company, and how much i should put back into mine.
> 
> ...


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## TeesForChange (Jan 17, 2007)

It really depends on what your needs/wants are. If you want to grow the company and invest more in inventory, supplies, etc., then it would make sense to put more of the profits back into it. But if you want to pay yourself more, then you can put less. I think whatever works for your needs...


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## brice (Mar 10, 2010)

Nice post Ivan. I assume the growth investment is kept for future business investments, new product, manufacturing methods etc. A pot of gold used by the business, instead of your personal funds (even though they are your funds, you've reserved them and don't consider them income, even though Uncle Sam does until you spend them on the business). 

Makes perfect sense. 

My approach is to use my profit to pay my business debt and THEN use an approach similar to what you describe for the future of the business. So I'm starting by MAXIMIZING my investment into my business which will pay off later.


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## brice (Mar 10, 2010)

TeesForChange said:


> It really depends on what your needs/wants are. If you want to grow the company and invest more in inventory, supplies, etc., then it would make sense to put more of the profits back into it. But if you want to pay yourself more, then you can put less. I think whatever works for your needs...


Inventory and supplies aren't growing the business. They are cost of goods sold and are overhead for operation of your business that should be factored into your price to your customer. 

We're talking about what you do with the PROFIT after those inventory, COGS, etc come out of the gross. If you are taking your business seriously and treating it as a business, you need to consider investment back into the business separate from your personal income. The investment you leave in the business (or profit you don't take and may not immediately spend on the business) is important if your business will have a future. It will cover you in times of economic depression and propel you in prosperity because you can innovate do new things. If the funds for growth and reinvestment have to come out of your pocket later, you will NOT grow as fast. That cash on hand is very important to the health of your business. Should you try to get a loan later for your business, that investment / equity will pay off. It demonstrates a maturity in business management that a lot of small businesses fail to demonstrate.


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## thutch15 (Sep 8, 2008)

I put 100% back, because I also have a fulltime job. Now 1 1/2 years later I have 6 color vastex press, Hotronix heat press, Toyota 9100 embroidery machine, Roland 24" plotter, and many extras ALL free and clear. Now 100% goes into my pocket.

Also, don't be scared to grow slow.


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## crazymike (Aug 18, 2008)

If you have any money left after taxes you didn't give the government enough!


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## wormil (Jan 7, 2008)

If you're not taking a salary, you're working for free and that isn't a business, it's slave labor. 

Obviously in bootstrap situations there isn't going to be enough to justify a "salary" but you do need to see a reward from your hard work.


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## out da box (May 1, 2007)

Yes you have to reward yourself somehow. When I started I didn't have money, credit, backing, funding, inventory- nothing.
I did have a four color old atlas manual, and some screens, etc.
I had just quit working for a local screenprinter who was/is a beast.
He trained me well enough to be able to hustle it out.
I was lucky, I need very little money.
I rewarded myself here and there by buying something for myself and/or my business- that gave me more joy than blowing 500.00 on fun.
I knew I could take 500.00 and make a million. 
Might take a little sacrifice, but nothing comes easy.
Not having a job or financing to grow a new business is a bear, but you do what you gotta.
Until your cash flow meets up with your needs, something has to suffer.


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## wormil (Jan 7, 2008)

So have you made the million yet?


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## out da box (May 1, 2007)

Almost there.


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