“I’m just starting a business – how the heck will I replace my income?”
It’s the question every business owner asks in the beginning.
It IS daunting to think about how to replace your income with your own business. Trust me, I get it – I’ve been there too. Almost every new startup I talk to has the occasional rush of how am I going to make this happen?
Instead of spending time stressing about it, I’m going to give you a simple tool which will make it easier to figure out how to accomplish this!
First, know what you need.
What do you make in a month? Or what would you need monthly in order to survive?
Go with the lowest of these two – make it easy on yourself in the beginning! At this point, you’re just overcoming that first hurdle of getting things off the ground. Focus on this first and then look towards growth after.
Got that number? Awesome! Now we’re ready to play!
For service-based entrepreneurs…
I find this is the easiest calculation.
Let’s say your number is $3000 a month.
Now, divide that by 4 so you get your weekly targets.
That takes us to $750.00 a week. Not bad, right?
$750 per week is a lot easier to think about than $3000 a month. But we can make it even easier by making it a daily target.
Divide this number by 5 to get your daily target (when accounting for a 5 day workweek).
That takes it down to $150 a day!
Yes! Isn’t that easier to think about now? It’s so much more relatable when you can think, ‘all I need to do is make $150 a day.’
Then you can start working backwards to figure out how you can bring $150 worth of value to someone else.
For product-based businesses…
It can be easier to think in terms of ‘how many X do I need to sell each month/week/day?’
Because it’s easy to know your cost on products, I recommend doing the calculation using your revenue on the product.
Do the same calculation as above, but divide it by how many of your products you have to sell to meet it.
Whaaaaaaat do I mean?
Ok, so take your daily target and divide it by how much you make from each sale.
In our example, we’ll use our $150 daily target. Say you make $50 of revenue for each product sold.
150 divided by 50 is 3 – so you need to sell 3 products each day and you’ll be right on track! Yeah!
You don’t have to make this all from one source, either
Like any good investment, you can totally diversify. You can (and should) create multiple revenue streams in your business. Maybe you want to make an info product to sell, like an e-book or a course. Or perhaps you sell a product, but you also service it or provide replacement parts. There’s lots of ways you can branch out and find other ways to make money in your business.
If you’re in the beginning of your business adventure and you just need money now, you can totally get creative with it. Puh-lenty of entrepreneurs have gone outside the box to either save or make money. Can you cut cable to save monthly costs? Sell some stuff around the house you’re not using? Yup, you can get your house clean and make money at the same time.
Sure it’s not something you’ll do all the time but it gives you a way to get over the hump.
This calculation ain’t perfect. It doesn’t account for expenses, or taxes, or any of that necessary jazz.
However, it does give you a great benchmark to work towards. Sometimes we just need a simple guide to get started!
To happy (and profitable) business building,