Question 16.2.2: When sales are $5000 or less per week, Johnson can take no s......
When sales are $5000 or less per week, Johnson can take no salary, and the business loses money. She can take a small to modest salary out of the company when sales are between $5000 and $10,000 per week, but she can take a good salary when sales are $10,000 or more per week.
(a) During how many weeks did Johnson take no salary? 6 weeks
(b) During how many weeks did Johnson take a small salary? 10 weeks
(c) During how many weeks did Johnson take a good salary? 0 weeks
Business owners often take little or no salary for the first several months to a year after starting a business. As a result, it is very important that someone starting a business has enough financial resources to get through the first year.
Careful planning, and budgeting ahead of time help an entrepreneur determine the funds needed to start a business. Lack of good planning and budgeting is one reason so many new businesses fail.