How much of your gaming affiliate revenue is chewed up by expenses?

[MichaelCorfman]

As we all know, when running a business, it takes money to make money. Operating gambling portal websites as an affiliate is no different. For a small hobby business the expenses can be as simple as hosting and bank fees. But expenses can quickly grow to include lots of other items like equipment, paid links or advertising, subcontracted content development, additional staff, and even office space if you move out of your home.

What percent of your gaming affiliate revenue is chewed up by expenses?

And I invite you to post whatever information you might like to share with other members about the nature of the expenses you have running your portal sites.

Michael

[MichaelCorfman]

Casino City has all of the expenses of a small business. There are around fifty of us, so our expenses are mostly in the form of salaries for staff members. But we certainly have to pay rent for our office space, and we have lots of equipment like computers for everyone in the office and lots of web servers.

Before passage of the UIGEA, our revenues exceeded our expenses by a good margin. But that changed in the following months so that our expenses exceeded our revenues, although we are getting close to being back in the black again. I'm a big believer in investing revenue back into the business to fuel revenue growth, but still like to operate with a margin of 20%.

Michael

[Doolally]

My PRE-TAX expenses run about 40% of my gross income. Then of course the dreaded Tax Man likes to take his large percentage as well so about 22% profit goes in Corporation Tax then he takes another 18% or so when I actually pay myself something.

Come to think of it. He does all right. Grrr.

[greek39]

Imagine for a moment how much of your earnings are chewed up by the dark side, Negative seo techniques. Imagine the billions these thugs steal every single day across the web.

Imagine how much some aff programs burn ya for. I am certain if we did not have these wicked crimes earnings would be good.

A thought?

greek39

[Doolally]

Aw no Greek!! I was already in depression thinking about the Tax Man!

[greek39]

Originally Posted by Doolally

Aw no Greek!! I was already in depression thinking about the Tax Man!

Sorry about that lol but take five minutes and think about it. I would wager your income would double despite the UIGEA. Now think about the about of time you spend keeping your site secure. Throw in some time chasing payments down and tracking bogus stat reporting. Lastly all the time spent on email tag. Add it all up and taxes would non-issue.

Perhaps this is all part of doing business. Just a mere 1% improvement would certainly make us all quite happy.

greek39

[TheGooner]

Michael - that's a very tricky question - especially when you consider that it can financially prudent to actually increase the declared corporate expenses to minimise tax take. Also down here the top personal tax rate is above the top corporate rate - so leaving cash in the company is tax efficient.

Last years declared company profit was around 35% of revenue - making expenses 65% - but we could have organised it to be significantly higher or lower - depending on the best financial situation.

As a small business operation then essential expenses that are directly needed to operate are probably only 5-10% of revenue.

Then there is the question of shareholder salaries and directors fees - which currently run up to the limit of an appropriate tax break limit - but could easily run to 0% to 100% of revenue ... depending on how it best fits tax schedules when they're released each year.

Finally, of course you add in the "chosen expenses" such as trips, cars, non-essential computer / video / audio gear, and a beachside registered office which is another 35-40%. These could all be trimmed tomorrow and are hardly essential to doing what we do - but nice to have.

[kaus]

Way to make it complicated Gooner...nice post though.

As a small timer every last penny goes back in. This could be $100 whatever to help purchase some of the oh so neccesary things. Lately and this may sound sad but what I have been doing because I am a limit holdem player/tournament player. I have been making small deposits on poker rooms and than building it to a certain amount to off set marketing expenses. This has helped me to watch my game, and not lose because of bordem. I am looking at it as a way to pay for things without using my own pocket money which is limited.

So far I have paid for 4 ad purchases and now am buying a professional design of my site to hopefully help me climb the SERP's better with a properly coded webpage.

I think until I am making 1k per month most will go back in.

This I would think would be the norm of any person operating their own buisness whether online or in the working world.

That being said I can only imagine the amount of affiliates out there who blow their revenue month after month gambling

[matted]

I'm pretty cheap - and always on the lookout for the best deal and will not make an expense that is not necessary... Trying to loosen up a little bit, as I know there are benefits to spend money on things I dont need, but would be nice to have. I currently only spend that 5-10% of revenue on necessary items... But allow myself up to 50% for all expenses... but rarely spend more than 25%. That leaves about half for me, minus taxes of course.

Lots of additional expenses coming soon... I'll probably need to upgrade my hosting, but some software, and do some paid marketing. It is nice to have the money in the business for these expenses - I started up with only my time and very limited financials (less than $500/yr).

[TheGooner]

Originally Posted by kaus

Way to make it complicated Gooner...nice post though.

Oops - yeah sorry about that Kaus.


But thinking about taxes is usually something that people starting up don't think about - and you can "save" an awful lot of cash by simply getting things structured right.

The first full year of webmastering - I did everything straight up simple - and ended up paying wheelbarrow loads full of tax.


This year (my 7th) we were structured much better (as outlined in post above above) and taxes dropped from 40% of income to just 12% of income - by the legal declaration of expenses in the "best" categories.

So expenses officially shot up but I agree with Matted - you can run leanly at around 5-10% of revenue on essential spends (before salaries).