Micro Business School - How to Calculate Your Hourly Rate

The thinkVAULT Micro Business School Step Two: Calculate Your Hourly Rate.  

In Step One, you determined exactly what business to go into. You met the first basic criterion: You're good at it. The second key factor: Someone else will pay you to do it. Keep in mind that if you wouldn't pay you for it, odds are that few other people would either.
There are a few exceptions to this, but your mindset about your product or service will affect your ability to market and sell it.

The next critical question for you to answer is:

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How much revenue do I need?

This is the "quick and dirty" rule is this: You must cover all of your living expenses. If you have no savings - a common shortcoming in this society - then you must plan to cover your expenses quickly. This may mean incorporating a Plan B into your strategy.

Calculate your annual financial needs by starting with your pre-business-owner family budget:

1. Include housing, food, household supplies, and utilities.
   
2. Next, add transportation expenses - car payment, gasoline/fuel, maintenance, parking, etc.
   
3. Remember your "hidden paycheck" as well.
• health and dental insurance.
  
• life insurance.
  
• formerly reimbursed expenses, such as cell phone, internet access, etc. 
4. Do you have growing children? 
• They'll need clothes and shoes. 
• Are they under the age of 12? Include childcare costs.
  
5. Add in other essentials and discretionary expenditures. 
• Savings - emergency fund and retirement. 
  
• Clothing for you - over the course of a year. 
• Cash donations to church and charities.
  
• Vacation - plan for it, whether or not you get to take one.
• What else do you need? Record and plan for it.
6. Total the numbers and multiply it by 1.30 - about what you'll need to cover taxes.
   

The list can get long and detailed. I recommend using a spreadsheet for the process. Remember not to cross-mix weekly, monthly, and annual numbers. You are calculating what you need for an entire year.   

Your Real Hourly Rate:
It's higher than you think.

You should now have a total amount for the year that may scare you a bit.

1. Calculate the number of days you will work.
   
• On average, start with 240 days. Or... 
• If you checked the calendar for exact Monday - Friday working days, then subtract your planned vacation days.
  This may be 5 or 10; remember this in Year One. 
  
• Decrease the number further by 5 more days - a "fudge" factor. 
  
2. Now... divide the financial needs amount by the number of days above. That's your minimum DAILY rate. 
3. NOTE: You have yet to calculate the needs of the BUSINESS. 
4. This first number is just what YOU need to live.
   

If you have not already begun, immediately gather and record what your necessary business expenses will be. Carefully managing your revenues and business expenses will govern the availability of the cash you calculated above as family needs. 

Necessary business expenses, and exactly what to include, will be covered in another entry -- Step Four!

Step Three: The first 5 tasks you must do to gain momentum. Check the next blog entry.



E-mail us if you have a question about calculating your hourly rate. 
This Micro Business School series is for new and emerging business owners: Those people who neither have the time nor an immediate need for a formal business plan.

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Micro Business School - What Do You Do?

Introducing: The thinkVAULT Micro Business School. 

As I look back on the many challenges that my clients, and I, have faced, a recurring theme emerged. We have all wished, at some point, for someone to take us by the hand and say, "Here's what you need to do." Or at least: "Here's what I did about that."

So, in the interest of living up to my original vision:

A profitable, viable, solidly planned, and well-organized business for everyone who has a genuine passion for building one.
...let the "hand holding" begin.

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Who is this for?

The focus is women starting or growing a micro business. Typically those who have:

1. Never owned a business before.
   
2. An urgent need to bring in income. 
• Downsized, laid off, employer out of business.
• Head of your household, primary breadwinner.
  
3. A belief that all economic conditions present opportunities.
   

If you see yourself described in the list above -- regardless of your gender -- thinkVAULT can help you with starting and growing your business. You know for sure that you don't have time to "attend the School of Hard Knocks." That is a long and painful road to take... Neither do you wish to "fly by the seat of your pants." That stopped working, well before the 20th century ended. The world and business move too fast...  

If you want to save yourself a lot of time, and money, come along on this journey with us.  
If you have a pressing concern or burning issue, send an e-mail or leave a comment below. 

Step One: Choose something to do.

Make TWO lists, on two separate sheets of paper (or in two different files, if you're using Word):

1. Things you're good at doing. 
• Remember, you need to start making money. What are you really good at doing, RIGHT NOW?
• Litmus test: Would three other people who know you -- and will tell you truth -- also say you're good at these things? 
• Sit your list aside or close the file. NO cheating on part 2, below!
  
2. Things you would pay someone else to do. You will only be able to sell what you believe to be of value.
   

See which skills appear on both lists. Rank your top three. If you need a tie breaker, which one would you wake up and do at 4:00 a.m. and keep doing until midnight? 


Step Two: Can you make enough money at your number one choice. And just how much is that? Check the next blog entry; this post will be updated, once it's "live" for reading.



E-mail us if you have a question about how to choose YOUR something. 

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Christmas Fun - Santa's Upgraded Sleigh

What might Santa's sleigh look like with some 21st century upgrades?

A bit of shameless corporate self-promotion on the part of
General Electric.Click each listed improvement to see a detailed description.

E-mail us if you would like help with removing obstacles to your business growth and success. 

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Goals or Resolutions - Which Is Better?

Are goals or resolutions better for business owners?

This entry is from guest blogger, Cindy Hartman of Hartman Inventory Systems.  a business and personal property inventory company

As each year comes to an end, if you’re like most people, you begin to think about what you didn’t achieve the past 12 months and what you plan to work on “next year.” Often, though, “next year” always remains as “next year.” Kind of like the statement that “tomorrow never comes.”

The end of one year and the start of a new one encourages most of us to create New Year’s resolutions. But resolutions are rarely kept. I read a statistic (I can’t remember where) that showed 83% of resolutions are broken by January 31. I wonder what the statistic is by July 31. Or the following December 31. My guess is that the number is quite high.

I think it’s because a resolution is often just a thought or desire -- perhaps stated out loud, but rarely written down. Yet, when people set goals, they usually assign actions and deadlines to each item. Goals are then easier to achieve because you are holding yourself accountable.

Consider your business. Would you rather make a resolution to double your revenue or have a goal to do so? If you resolve to do it, it’s probably a thought or wish. But if you make it a goal, you’ll be more focused. You’ll most likely create a budget, a marketing plan and a monthly action plan. And here’s the key – you’ll measure your progress month-to-month. You’ll have numbers to determine if you’re reaching your desired revenue. And through this assessment process, you’ll have time to change your processes to improve your results.

Turn your resolutions into goals. Measure your progress, and December 2010 will be a much more rewarding year end because “next year” became “this year” -- for whatever desired outcomes you’ve chosen. 
 

Happy New Year!

Cindy. 

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E-mail us for help and solutions for setting, measuring, and reaching your business goals.  

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