Home business

[smr91481]

My wife has a little part-time thing that she does from home that only brings home around $200-$300 a month in net profit. We are looking for advice on what percentages we should be putting back into it to make it grow and what to bring home. And is there anything else she should consider setting money aside for? She wants to grow this thing slowly and without going into any debt.

[target2019]

I think your spouse is on the right path. I consult, and after deducting ordinary expenses, I may have $500 profit per month. Money coming in is very irregular, since I now bill quarterly instead of monthly.

Based on 6k profit in a year, I put $1500 into IRA, $1600 into taxes, and about $1000 into a piece of equipment, like a computer.

Whether this is appropriate in any way for her depends on her business type and your own tax situation.

I am trying to minimize profit since these earnings go on top of our two salaries, for instance.

[smr91481]

I'll be a little more specific...she is baking out of our home. Mostly cakes and cupcakes. The almost has all of the equipment she needs (she's been buying as she has brought money in). She collects the money two weeks before and order is due, so she's not even having to front the money for ingredients. So, I suppose for now, the money that she puts back into building would be for marketing mostly.

I'm thinking maybe keeping a small amount in the account for whatever expenses may come up and putting the rest into the household income

[Nords]

Quote:

Originally Posted by smr91481 My wife has a little part-time thing that she does from home that only brings home around $200-$300 a month in net profit. We are looking for advice on what percentages we should be putting back into it to make it grow and what to bring home. And is there anything else she should consider setting money aside for? She wants to grow this thing slowly and without going into any debt.

Quote:

Originally Posted by smr91481 So, I suppose for now, the money that she puts back into building would be for marketing mostly. I'm thinking maybe keeping a small amount in the account for whatever expenses may come up and putting the rest into the household income

I believe she'll need to pay self-employment tax next year when you file your tax returns.

It might be worth marketing her products on Facebook, Craigslist, her own blog, and Pinterest. The first would be pictures for her friends (to drive local word of mouth), the second for local customers, and the last two to show off the photos. And, of course, once she's blogging then she can display ads on the blog for additional revenue.

[ShortInSeattle]

Quote:

Originally Posted by smr91481 My wife has a little part-time thing that she does from home that only brings home around $200-$300 a month in net profit. We are looking for advice on what percentages we should be putting back into it to make it grow and what to bring home. And is there anything else she should consider setting money aside for? She wants to grow this thing slowly and without going into any debt.

I think the percentages are going to be pretty industry specific. I started my consulting biz in 2006 and you will probably have different priorities in a baking biz.

A few things to consider though...

1. Legal structure - Consider an LLC. It's cheap to set up and limits your liability if you are scrupulous about separating personal and business finances. You don't want a sick customer to come after you for your home.

2. Business Name - if you will ever be online, snag a good name and buy the web domain. Do a US trademark search to avoid problems up front. It's a pain to change names partway in.

3. Run your numbers. What is the cost of producing a cupcake? How much do they sell for? How much does it cost to acquire a customer? Good things to figure out.

4. What are your goals? Is this a hobby business or do you want to hit certain revenue targets? This will indicate your next steps.

5. Beyond those basics, prioritize your spending on activities that will bring you customers. Coupons? Email Newsletter? This will work great up to the point when you can no longer produce enough with the space/labor you have. Then you'll have a new set of challenges - kitchen rentals & employees.... If you want to go there.

Just some thoughts.... Hope they help.

[gromit]

If you are in Louisiana, you might not want to grow so much that you get noticed, until they pass a cottage food law. This news report was as of September 2011 and I don't know if anything has changed since then.

"Are you a home baker who would like to sell your goods to the public? Maybe some of you have, but did you know it's illegal in the state of Louisiana?"

The Cottage Food Law | KATC.com | Acadiana-Lafayette, Louisiana

At least there is a petition to change the law.

Personally, I'm pro cakes and pro cupcakes...mmmmmm.