The Secret to a Sustainable Business, Part 2
Do you know the answer to this question: How much money do you need to survive comfortably on a monthly basis?
To scale a business, there are two numbers that you need to know: how much you need personally as take-home pay and your business revenue goal, broken down by year, month and week. Without these two, you’re essentially “winging it” and seriously limiting your earning potential. I refer to the intersection of these two important metrics as the Sustainability Number.
Here’s How to Calculate It
First, use this budget worksheet to map out personal monthly expenses. This will include living essentials – food, clothing, shelter, utilities and transportation. It’s a big mistake to think that you can build a business without paying yourself first, particularly if you don’t have six months or more of savings in the bank.
And don’t leave out personal maintenance, like getting your hair done. When you look your best, you feel your best, and that confidence boost is key for selling to new clients.
The total of your monthly expenses will give you the first metric – the total monthly dollars needed for personal sustainability. This represents the minimum amount necessary in salary to thrive as the business owner.
Now you can determine the second metric – yearly business revenue. To get to this number, start by determining the business’s expenses for the year. Finally, add the yearly business expenses to the personal yearly salary to get the final metric – your total sustainability number, which is the amount of revenue the business needs to earn on a yearly basis to cover the cost of your work and all of the other business expenses.
Knowing these numbers is liberating and allows you to get real about what your finances really are. If you’re ready to increase earning potential check out our audio series that walks you through the step-by-step process of finding your sustainability.
We believe you can achieve financial freedom. How about you?
What’s your desired monthly take-home salary? Share it in the comments below.
