My favorite thing about entrepreneurship is that it is completely customizable. You can make as much or as little as you want and work as much or as little as you want - just as long as you're being mindful and intently working your business around your dreams.
This may not happen in the first year or two, but as you get clearer on what needs to be done and what you actually want, you'll be able to start making your business work for you, and not the other way around.
Today I'm going to talk about how to use your business to build your dream life.
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This sounds like a no-brainer, but it's not uncommon at all for new entrepreneurs to operate with little to no real idea of what they want out of their business.
Most think they want things like "6 figure businesses" or enough money to replace their day job, but in order to make our business work for us, we need to get crystal clear on what we want so we can develop a strategy to get there.
Entrepreneurship is different than being an employee because there are costs associated with our business and taxes we need to pay on profits.
Knowing what we need or want can be a bit difficult at first because of all these factors, but no worries, I'm going to walk you though it and break it down so it's simple.
The first step is just to figure out what you want out of life and then we'll reverse engineer your business goals around it.
So journal it out! Do you want enough money to replace your day job? Enough for a down-payment on a new home or car? To take a summer trip to Greece? Pay off your student loans or credit card? Save for your children's college? To have enough money to support your favorite charity?
Whatever you want, write it down. If you're paying off debt or saving for big ticket items for the future, have a date in mind for that goal and break it down by year.
Have a dollar amount you want to have after taxes and costs at the end of the year in mind.
Once you know what you want after taxes, the next step is to figure out what you need in sales to get you there.
You'll need to know 3 things to figure this out - the amount you want after taxes, your profit percentage, and your estimated business tax rate.
Your profit percentage is the amount of profit you get to keep as a percentage of sales. Profit divided by sales = profit percentage. Sales - costs = profit. To know your profit percentage you should be doing monthly bookkeeping, simply tracking your sales and costs and seeing what you're left with.
You'll back in to the sales you need to meet your after-tax profit goals by using the following formula.
After-tax profit goal = sales x profit percentage x (1 - estimated tax rate).
Once you've figured out the sales you need to meet your after-tax profit goals, you'll need a strategy to meet that sales goal. This isn't terribly tricky and I created an entire blog dedicated to how to create a simple sales strategy in 5 minutes or less.
Essentially, you just map out your different products and services and tweek the price you'll sell them for and the amount of each you'll sell then add up the sales for each. In the blog post, How to Increase Income by Setting a Simple Sales Strategy, I walk you through a visual example of this. You can read it in full here.
Be sure to stay in touch and check out my free resources. The best place to start is by getting your Free Starting a Biz Checklist to make sure your business is set up right and you haven't missed a step that could cost you a lot of money or potentially cripple your business.
BUT THAT LEADS TO...
💰Getting hit with hefty penalties and interest
⌛️Wasting your valuable time
🤯Stressing out over handling the mishap
🥴Lacking insight on how your business is doing and thus making poor business decisions.