successful business owners always had a good team and a good mentor. That quickly led me, a sole operator, to ask myself, “Can a sole operator run a successful small business?” I was shocked to find that in all the examples of successful businesses, I did not find a single example of a good one-man or one-woman shop. So, lets figure out what that would look like.
A single person shop will typically be a service business. It is impossible to run a retail or trade business without employees. A service business will typically charge by the hour or project. Given a 40-hour work week (okay, stop laughing!), let's look at what a sole operator would have to bring in, in terms of revenue, in order to ‘make it.’
Here’s what I’ve come up with:
Median income in America is around $48,000
Billable hours in a week: 25 (that’s five hours a day, allowing three per day for admin, etc.)
In order to make $48,000, you would need to clear (net profit) $925 a week
That is $37 net profit per billable hour
If your Net Profit Margin (you know, the bottom line) is 50%,
then your hourly rate should be $75 per hour
At 25 hours, that would be a weekly sales revenue of $1850
And a monthly revenue of $8000
If you’re a service business, you might be thinking that your profit margin is more than 50%. If so, I recommend taking a look at your other 15 hours in the week (and your P&L, but that's another post!). If you’re running a successful business, then you've built a team around you: CPA, marketing consultant, PR consultant, business advisor, etc.consultant, business advisor, etc. Chances are, your expenses are eating up a good chunk of those revenues.
These numbers might not line up for you and your business, but I think they provide a good exercise, even if you’re not a service business. Take some time to sit down and figure out what you need from your business’ bottom line. You might be surprised. No matter what you learn, don't be afraid to look at it because knowledge is power.
Where Should I Go Now?
The One-Man or One-Woman Show: Can You Make It? Part II
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