Take your figures for several years back and find what percentage of the total receipts was profit. If, for instance, your business earned $9,000 and your total sales were $100,000, then 9% of your receipts represents profits. You can therefore declare a monthly dividend of 8%, and when Christmas comes you will have an extra dividend, being the accumulated 1% each month you did not draw out in dividends.
Debt
If it were not for debt most banks would go out of business, for banks live because debt is a recognized factor in business.
The plan of getting rich through saving is a very difficult and practically impossible road to wealth.
The man who is working himself out of debt puts in better effort and longer hours into his business than the man who does not owe a cent. Go in debt reasonably and carefully, and you can make money with other people's money.
Money has a fixed value in itself in the matter of earning capacity. This fixed value is 5% or 6% or 7% as the case may be. One who puts his money in securities gets his money which the cash earns without effort on his part. The hustler, however, can make 10%, 15% or 20% on the money, plus his hard work. Therefore there is an opportunity for a hustler to borrow money at 5% or 6%, and with that money and his energy earn 10% or 15%.
The active man can therefore pay 6% per annum for money, and use that money to discount monthly bills at from 2% to 5%.
The building and loan association, the installment firms and monthly payment real estate concerns show what people can accomplish who go into debt. Thousands of families now live in their own homes because they went into debt. Few of these families would have homes if they started in on the saving-the-money-first plan and bought for cash.
Don't go in too deeply. Calculate your earnings in business. Allow a wide margin for discount on your figures. Hard times and unlocked for reverses come, therefore you should play safe. Go into debt on a 25% or 50% basis of what you are reasonably sure you can pay.