A good rule of thumb to follow regarding the earned income from your home based business is to reinvest into the business all profits in the first six months of operation.

How you do this is completely up to you and dependant on your business model, but it is a success tip that works for many startups.

Re-investing Your Profits

Spend the profit on advertising, business books or night classes, new equipment or save it as capital to draw on in those rainy days.

As the first six months of operation for any business is critical, and even more so for home based business, do not assume that any of the business income is free and clear during that time. Reinvest or save it.

After six months have passed, you will be able to forecast business income and expenditures more reliably and could begin taking a monthly salary for yourself. Remember, starting and running a successful business is not a replacement job for yourself or a way to keep busy while the kids are at school or while you wait for gainful employment.

A successful home based business should be regarded as the beginning of a viable enterprise that will expand and prosper. Your business should look to the future as employing others at some point and further down the line, being a entity unto itself that can be sold or transferred to another.

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