Why Making a Profit Isn’t Enough to Survive in Business
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- čas přidán 17. 12. 2023
- Today we’ll hear about:
• A business owner who made $8 million last year but is going broke
• The best way to structure bonuses for your team that doesn’t negatively affect your profits
• Someone wanting to buy a gym, but the current owners aren’t being honest
• What to take into consideration when determining how to pay yourself as the owner of a business
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• Stages of Business Assessment: ter.li/pkurwg
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The last call in this segment: Dave is not correct; he's being way too broad when saying "it doesn't matter" whether you pay yourself in wages or distribution from the business.
As a sole proprietor he is correct, but if the business is taxed as an s-corp, you pay income taxes on the business - *without incurring either side of FICA* - after owners pay themselves a 'reasonable' wage, as well the potential for a 20% small business tax credit from the trump tax cuts.
At $75k profit, caller is probably on the border-line of when to switch, but if his CPA is recommending distributions over wages, there is probably a reason, that shouldn't get steamrolled with Dave's way too generalized statement. Hopefully the caller has more in-depth discussion with his CPA.
Great video, favorite Ramsey channel.
Is that a paid promotion for accounting systems or no Dave?
Looks like the face on camera may have some dust on the lense or sensor.
How do u value a business, the wee fabric shop i work in is closing but someone is interested and im wondering how u value it
1-3x net profit + the cost of the depreciated assets (tools) @ruthirwin8222
3 times the profit that the business makes
If it’s closing, just buy the assets. No need to buy the customer base
@@joseborrero2402no it’s not that simple. Valuations are based on a lot of different things. Typically they’d based on market data on sales on similar companies in similar/the same area. So if you owned a company in this region that did X and a similar sized company in this area sold for 6X EBITDA then the valuation would likely be that. There is not special multiplier number that applies to all companies or even an industry
Cash flows
Negotiation and Business Policy is the problem. You can get the job done by borrowing money and getting profit on it by charging interest to make money. If you have a good business policy and once they accept the business contract you will win because they accept the deal.
Why Making a Profit Isn’t Enough to Survive in Business?
Calculate your expenses with your monthly expenses (Product Spending and Employee Pay) and monthly earnings. Then start questioning.
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