Meet Suzy, a determined single mom who realized that becoming an entrepreneur was her path to financial stability for her family. Suzy juggles multiple businesses to secure multiple income streams, but she faces a common challenge shared by many small business owners – making decisions based solely on cash potential, without considering the hard data behind the numbers.
Let's take a closer look at one of Suzy's businesses, her cleaning company. She secured a contract with a mall for $13,000 a month, which seems like a significant amount. However, when we dig deeper and break down the expenses, the reality starts to unfold.
Out of the $13,000, Suzy needs to employ at least two full-time employees apart from herself to fulfil the contract. Since the mall is located outside the city, these employees require housing near the site. Suzy now has to factor in additional expenses such as employee salaries and housing costs.
Let's crunch the numbers as an example:
Contract Amount: $13,000
Employee Costs: $8,000 (approx.)
Housing Expenses: $1,500 (approx.)
After considering these expenses, Suzy is left with around $4,500. And from that remaining amount, she still needs to account for her own salary and other operating expenses. The effort she puts in versus the income generated doesn't align, leaving her questioning the sustainability of her business.
Suzy's story highlights the importance of using real data to make informed decisions in your business. Just because you see cash coming in doesn't necessarily mean you're making a profit or building a sustainable venture.
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