How do y’all divide up your revenue?
For example 500 ticket once payment is collected tax paid and cogs, how do you dive up how much goes to capital reserve, overhead etc any advice?
Very helpful ty
Hi Bsonier,
A lot of people do percentages, and I think that's great. Another way is by doing a budget. At the beginning of the year, you should be doing a budget with all of these things you asked about included. That way you would know how much to allocate to each item. (or %) As you go through the year you can update your budget as well with how things are going.
I would have your planned budget in one column and then your actual numbers updated monthly in another column beside your planned budget.
If you are doing this, you're going to know exactly how your financial year is trending and what you need to save for what. No getting to the end of the year and waiting for the accountant to tell you how your year went.
I hope that's helpful. I've added some picture from our own budget so you can have an example.
Cheers.
I wouldn’t start by deciding what percentage goes into each bucket.
I’d start with your actual numbers.
For that $500 job, I’d want to know:
Once those are covered, you can see what gross profit is left to pay for overhead, owner pay, taxes, reserves, and profit.
The biggest mistake I made early on was looking at the money that hit the bank and mentally treating too much of it as available cash.
It wasn’t.
A lot of that money already had a job.
I’d also figure out your monthly overhead separately: software, insurance, vehicles, office/admin, marketing, phones, rent, bookkeeping, etc. Then divide that across the amount of work you realistically produce.
For reserves, I’d build them intentionally rather than just saving whatever happens to be left over. Vehicle repairs, equipment replacement, slow months, and payroll emergencies will happen eventually.
Once you know your true cost per job and monthly overhead, deciding how much can go toward profit or reserves gets a lot easier.
I’d be careful copying someone else’s percentages because a labor-heavy service business and a material-heavy trade can have completely different numbers.
