Ryan Deiss breaks down how to categorize every business expense into specific buckets to stop profit leaks. If People or Cost of Goods Sold exceed 35% of revenue, profitability tanks. Watch for hidden drains: merchant fees eat 2-3% of sales, and any miscellaneous spending over 2% deserves its own line.
I've scaled 8 companies to $20 million and beyond, and I see business owners go from barely making minimum wage to making more than a half a million dollars a year after implementing just one tool they can build in less than one hour. This is part 3 of how to double your take-home profit using one simple Google Sheet, and we're on to step 2, which is to build your expense buckets. That may not sound sexy, but the reality is once you've decided on how much profit you're going to take out of the business, every other dollar that comes into your business needs a home. It needs a category. It needs a bucket. Because if a dollar doesn't have a bucket, then it is a leak. It's a profit leak. But there's a right way to bucket, and there's a wrong way to bucket. Most business owners that I know, they're gonna build 3 or 4 obvious buckets. They'll have one for payroll, one for rent, utilities, maybe one for marketing. Then they just kind of throw everything else into a miscellaneous bucket and wonder where all the money is going. Well, Surprise, surprise, they don't know and that's why it's going away. So here's what your buckets actually need to look like. You need a bucket for people, so salaries and benefits, a bucket for cost of goods sold, for marketing and advertising, for facilities, your rent, your utilities, for technology and tools, other fees and admin, commission. Look, the more buckets the merrier because the more buckets you have, the more clarity you're gonna have about where your profit is being spent. So a few pro tips here. Number 1, your people bucket is usually your biggest. That's normal. But if that number, what you're budgeting for, if it's higher than 35%, you're probably not going to be profitable. There's just not enough left over. Same with your cost of goods sold. If that's more than 35%, not always the case, but usually that's a problem. Tools and technology, that's another bucket that tends to add up without anybody noticing. So keep an eye on that one. And merchant fees. Which are anywhere from 2 to 3% of your top line. They often go completely untracked, so give them their own bucket. The leakiest bucket of all though, that is your miscellaneous. Keep an eye on it, and if any individual expense accounts for more than 2% of your total revenue, just give it its own bucket. Money does not hide in the buckets you watch, it hides in the buckets you forgot to make. So build your buckets, add them to your expense analyzer. And once you do that, we can determine how much should be flowing into each of these buckets. Follow for part 4.
