5 ms·
Splitting all profit between founders early on just seems very wasteful to me. You should be reinvesting that money into your company, instead of wasting it on
by vaksel 18y ago
Splitting all profit between founders early on just seems very wasteful to me. You should be reinvesting that money into your company, instead of wasting it on paying salaries.
On day one you should decide on the minimum amount it'd take for you both to be ramen profitable. And that amount should be considered as an expense. Then out of the remaining profit, you should decide what % will go back into the company, and what % will be given out as a bonus.
So if for example you decide on $1,500 and 10% - on a $10,000 profit month, $3,000 will go to salaries, $700 will be split among founders as a bonus, and $6,300 will be spent on buying additional ads.
And if you for example have a 3x ad return. Meaning your ads make you $3 for every dollar you spend.
1st month you'll make an additional $18,900 that you wouldn't have had otherwise. Out of that $1,890 will go as bonus, and $17,010 will be spent on ads for next month.
If that trend continues(lets say your product is only limited by exposure), 2nd month that $17,010 will turn into $51,030, out of which $5,103 will go as bonus and you'll have $45,927 to spend on ads for next month.
And on the 3rd month, that will balloon up to $137,781, out of which you can get $13,778 as a bonus and a whopping $124K to reinvest.
So in 3 short months, you'll make an additional $14,471 for yourself and an additional $124K for your company, that you wouldn't have had otherwise.
Early on every penny counts. If you withdraw an extra penny on day one instead of buying ads that would net you 3x return, you are losing a ton of money
Month 0: $.01
Month 1: $.03
Month 2: $.09
Month 3: $.27
Month 4: $.81
Month 5: $2.43
Month 6: $7.29
Month 7: $21.87
Month 8: $65.61
Month 9: $196.83
Month 10: $590.49
Month 11: $1771.47
Month 12: $5314.41
- ChristianPerry 18y agoI agree. I ran a company that started making serious revenue its second year in operation. My partner and I made the choice then of paying ourselves salaries, keeping a considerable portion of the revenue in our business bank account. It was one of the best business decisions we ever made. The income that we saved is paying for our living expenses while we work behind the scenes to launch our new startup. If we had pocketed the cash, I doubt we'd be in as strong a position.
- DataWhore 18y agoI am working on a new vetnure with some friends, payed for from the cash flow/savings from their other project. It's the best system. Eat out less, build more things.