3 Smart Dividend Payout Strategies for Small Business Owners
Your investors may benefit from a payout strategy that provides positive cash flow on a quarterly basis. Offering dividends allows your company to fulfill this need while continuing to grow and thrive in the demanding market. When offering this type of investment return, you must determine how your company will payout dividends to fulfill your investors’ expectations. Here are three methods you may want to use for your dividend payouts in Missouri.
Set Amount of Earnings
If you want to give your investors steady quarterly payouts, you can send them a set percentage of your company’s profits before using the revenues for expenses or growth opportunities. Your investors will receive a stable payout, but you may not have the funds required for expansion or even continued operations if anything goes awry.
To ensure your company always has funds for continued growth, you may use the residual payout policy for your quarterly dividends. With this payout method, you fulfill your capital requirements before using the remaining equity to pay your investors. You ensure your company remains in good financial health by putting business needs before investor expectations.
You can actually combine these two approaches to create a hybrid plan that balances the needs of your investors and company. You will just need to set the stable dividend payout low, and then apply an additional return if you have leftover profits after taking care of expenses and expansion opportunities.
To ensure your investors receive a solid return year to year, work with an accounting professional skilled in determining the financial health of your business. You can acquire quality service and support from the accounting experts at accountRely in St. Louis, Mo to navigate this process with ease.