How to Safely Take Dividends from Your eCom Business

Roman Khan got on stage at one of our eComFuel events a few years ago and said something that became a cornerstone of my financial philosophy.

“It’s important to build your personal balance sheet alongside your business. Try to get to $2.5 million in liquid assets as soon as possible.”

The specific number matters less than the principle behind it. Maybe for you it’s $1M. Maybe it’s $5M. But the idea is the same: build a meaningful financial cushion that exists completely outside your business.

I’d always believed this intuitively. I’d been pulling money out of my business and investing it for years. But I’d never heard someone vocalize it so clearly or so urgently.

Here’s why it hit so hard: most eCom owners I know have 90%+ of their net worth locked inside their business. On paper, they look successful. In practice, they’re exposed. One platform change, one bad quarter, one industry shift — and the thing that represents nearly everything they’ve built is suddenly at risk.

Hopefully you have that big, life-changing exit someday.

But sometimes it doesn’t happen. Sometimes industries radically change overnight. And the discipline of taking regular dividends forces you to operate more efficiently while building a financial cushion that lets you sleep at night.

Your business should be your best investment. But it shouldn’t be your only one.

The Emotional Case Is Real

I’ve talked to dozens of store owners about this topic over the past few months. Two anonymous, paraphrased experiences from members of the eComFuel community capture the range:

“I’ve been reinvesting about 90% of my profits outside the business for over a decade. If I got fed up tomorrow, I could walk away and my family would be fine.”

“I didn’t think about investing outside my business until COVID hit. A lot of volatility and I realized I was stuck with one big thing and little else. Diversifying helped my finances and my mental health.”

Diversifying helped my finances as well as my mental health.

Read that last line again. Finances AND mental health.

If you’ve ever laid awake wondering what happens if the business hits a wall — and every entrepreneur I know has, including myself — this is how you start to fix that.

But the emotional case only gets you so far. You need to know when you can actually start doing this, and how. That’s where the data comes in.

Benchmarking Data on When Dividends Make Sense

I pulled early data from the 2026 eComFuel Trends Report — about 200 store owners so far. One of the questions: how do you handle capital extraction from your business?

There’s four buckets: don’t take anything out (not even a salary), take a small salary only, take small regular distributions, or take meaningful regular distributions.

Here’s what stood out.

The Sweet Spot Is 10-20% Top Line Growth

Half of store owners growing at 10-20% annually are pulling meaningful capital out of their business. For pretty much every other growth bracket, that number drops to 5-15%.

Why this range? Because you’ve got enough momentum to generate real excess cash without bleeding it all to fund rapid expansion. The business is mature enough and growing enough that there’s actually something left over after you reinvest in growth.

It doesn’t sound sexy. But it’s where the math actually works.

Owners growing 60%+ top line have capital extraction rates that look nearly identical to sub-$1M businesses. Both are pouring everything back in — one by choice, one by necessity.

If you’re in hypergrowth mode, this is a future conversation. And that’s OK. But it’s worth knowing the trade-off you’re making.

The $1M Revenue Threshold Is Real

Below $1M in revenue, less than 10% of store owners are taking anything out. You’re building the machine. That’s expected.

But once you cross that threshold and settle into moderate growth, the window opens fast. At $1-5M growing 10-20%, about 55% are extracting capital. At $5-25M with the same growth rate, three quarters are.

Margins Are a Gatekeeper

Below 5% net profit margins, less than a 1-in-5 chance of pulling anything out. Get to 10-15% net margins, and it jumps to better than 1-in-2.

You need some margin to work with. If you’re below 5%, the priority is fixing that before thinking about distributions.

Financial Knowledge = Money Dividends

This one surprised me most. Owners who rated their financial knowledge 5 out of 5 extract capital at nearly DOUBLE the rate of those at 3 out of 5 or below.

Think about why. You can’t safely pull money out of a business if you can’t forecast cash flow 3-6 months ahead. If you don’t know exactly what’s driving your profitability. If you can’t tell what’s ROI-positive and what isn’t.

Without that clarity, every distribution feels like a gamble. So you leave the money in. Year after year.

Financial fluency doesn’t just make you a better operator. It literally puts more money in your pocket.

Your business revenues may keep growing on paper. Your personal balance sheet is more likely to stay flat.

Financial fluency doesn’t just make you a better operator. It literally puts more money in your pocket.

How Much to Pull Out

Your business is almost certainly your best-returning investment. So you don’t want to starve it. But you do want to take some chips off the table.

This varies enormously based on your business economics, growth stage, and personal situation. But if I had to offer a rough framework:

Ballpark: 20-35% of excess cash after taxes and expenses.

Call it roughly a third. If you don’t have great alternative uses for the capital in your business, or you’re not confident you can deploy it well, bump that number up significantly.

This is a gut range, not a rule. Your circumstances will dictate where you land. But having a target — even a rough one — is better than defaulting to “reinvest everything” year after year without thinking about it.

How Often to Pull Money Out

Two approaches that work well, and you can combine them.

Monthly draw plus dollar cost averaging. If your business revenue is fairly predictable, set up a modest monthly draw and invest it on a regular schedule regardless of market conditions. Simple, automatic, and removes the temptation to time things.

Quarterly review. If your business is lumpier — and most eCom businesses are — sit down every quarter. Look at performance, upcoming capital needs, working capital position. Decide what you can safely withdraw. Then pull it.

I do a combination of both. Small monthly amount that goes out automatically, plus a larger quarterly assessment where I pull more if we have excess capital that quarter.

Where to Invest It

I did a full episode on my investment philosophy recently, and wrote it up in more detail. But here’s the concentrated version.

First Things First

Emergency fund. 3-6 months of personal living expenses in cash. If you don’t have this, stop here and do this first.

Tax-advantaged accounts. Max out your 401k, IRA, and similar vehicles before moving to taxable accounts. This is essentially free money from a tax perspective.

Hassle-Adjusted Returns

This is a concept I think about constantly and one that’s shaped my entire investment approach.

Everyone talks about risk-adjusted returns. I think a more useful framework for entrepreneurs is hassle-adjusted returns — what’s your actual return once you factor in the time, headaches, illiquidity, K1s, and operational hassle?

A few years back I was running a small investment syndicate called ECF Capital, investing in small eCom businesses. One of my investors — a really sophisticated, wealthy guy who had bought Tesla near the IPO and made a number of other savvy bets — passed on our first deal.

Everyone talks about risk-adjusted returns. Almost nobody talks about hassle-adjusted returns.

His reasoning: “The public markets let me buy when I want, sell when I want, no headaches, and the returns are consistently good. Sometimes great.”

I thought he was crazy at the time. Maybe even lazy.

Our deal returned slightly above market. But when I factored in my time running the syndicate and how long the capital was locked up, it didn’t come out ahead on a hassle-adjusted basis.

For most eCom owners already pouring massive amounts of time and mental energy into their businesses, simple wins.

What I Invest In

• ~70% US broad index. I like VTSAX from Vanguard — total US market, not just the S&P 500. You get the full mix of value, growth, small cap, everything.
• ~20-30% international. VTIAX — total international ex-US, insanely low fees.
• 90% boring, 10% bold. I take a small slice for 1-2 concentrated bets in areas where I have real expertise and outsized conviction.

What I’d Skip for Most People

Real estate — unless it’s your primary business, it’s rough on a hassle-adjusted basis. Especially low-unit residential. Different ballgame if you’re investing in a warehouse for your business or you’re deeply specialized and know your stuff.

PE, hedge funds, venture — most underperform the market, especially the ones accessible to general investors. The best ones are hard to get into.

Angel investing — the vast majority of angel investors I know have not made money. Fun to do occasionally to help a friend or if you have insane conviction. But don’t do it for returns unless you have a real unfair advantage in expertise and/or network.

A Note on Taxable Accounts

People avoid taxable brokerage accounts, but they’re not as bad as you think. If you buy a broad index fund and hold it for 10+ years without selling, it compounds effectively tax-free. Only the reinvested dividends — maybe 20-25% of total returns — get taxed annually. The rest is deferred until you sell.

Just make sure you’re buying things you feel good holding for a long time. Selling and re-buying kills that sweet, sweet tax-free compounding.

Where Do You Fall?

The biggest takeaway from all of this: should you be pulling money out of your business regularly? You’re probably in one of four buckets:

1. “I shouldn’t be extracting yet.” You’re early stage, growing fast, or both. File this away for the future.

2. “I need more financial knowledge to extract safely.” Invest the time to get your financial foundation solid and revisit. If you haven’t yet, check out our series on Financial Mastery for eCom owners.

3. “I’m already set.” You’ve got meaningful personal investments that cover your burn and you’re reinvesting by choice with a huge safety net. Huge kudos — you’ve won.

4. “Maybe I should be thinking about this more.” Good chance this is where a lot of us are. If so, hopefully the data and framework above give you a place to start.

95% of the entrepreneurs I know don’t want to retire on a beach. They want to build on their own terms without worry.

Your business should be your best investment. But it shouldn’t be your only one.

Want to Go Deeper?

Interested in regular insights on building personal wealth alongside a serious eCom business from the archives of our 7- and 8-figure owner community? Let’s stay in touch.