Are you a coach, a consultant or a trainer – or anyone else who trades their time for money? In general, do you have to be present in order to get paid? This also applies to those in the trades – painters, heating engineers and joiners for example – if you’re not out there, you’re not earning!
It also means that you are a limited resource – there are only so many hours in a day (and only so many hours when a client or customer wants to be seeing you!) so already your earnings have an upper limit. At best, if you work 46 weeks a year (e.g. 4 weeks holiday and two weeks off at Christmas) and there are 40 available hours in any week then you will have about 1,840 hours available.
If you want to “take home” £35,000 then that means that you would have to net £19 / hour. That’s after all costs, expenses, taxes and other costs have been taken care of. You might want or need less from your business (or more!) but this is just a place to start.
The point is – no one can actually earn during every single one of those 1,840 hours. So already your calculations are inaccurate!
Let’s say you are a consultant. How many hours a week do you spend on the following activities
- Social media
- Prospecting / business development
- Sales meetings
- Actual Billable Work!?
The reality is, when we set up in business we expect to spend 80% of our time doing productive, billable work (that we enjoy) and 20% on the other “stuff”; but, it’s often almost the other way around!
So 20% of those 1,840 hours = 368. Now, if we want to earn £35,000 we need to be pulling in nearly £100 / hour – and we haven’t included costs, expenses and taxes!
Unfortunately, what often happens is that we lose evenings and weekends to the “stuff” we don’t even enjoy (and often aren’t very good at) in order to balance the books.
That is not sustainable.
So – do yourself a favour and perform a reality check. Tot up your actual productive and billable hours for March and the revenue invoiced (assuming your invoicing is up to date!). Now look at all your outgoings for the month (and apportion any annual costs).
Do your numbers stack up?
At the time of writing (at the start of April 2022) cost pressures on businesses are growing – fast. This is the time to “do the sums” and work out if your business is sustainable. If you have staff working for you – and they do billable work, then you need to work that into your calculations.
Yes – scary times – but working on this NOW, and also addressing your cost base will allow you to map out a path to keep your business going.
If you would like to work through all of this with me then please do Get in touch.