{"id":4476,"date":"2021-02-11T10:00:51","date_gmt":"2021-02-11T18:00:51","guid":{"rendered":"https:\/\/berkonomics.com\/?p=4476"},"modified":"2021-01-29T14:16:05","modified_gmt":"2021-01-29T22:16:05","slug":"could-you-achieve-ten-percent-net-income-each-month","status":"publish","type":"post","link":"https:\/\/berkonomics.com\/?p=4476","title":{"rendered":"Could you achieve ten percent net income each month?"},"content":{"rendered":"

How planning is done today<\/strong><\/p>\n

Most entrepreneurs and managers, when modeling their business operations using a\"\" spreadsheet, start with expected revenue by month.\u00a0 Then they calculate cost of sales, and then project their expenses, to find the bottom-line profit or loss each projected month.<\/p>\n

One way to think for tomorrow<\/strong><\/p>\n

There is a rarely used twist that makes lots of sense.\u00a0 Add a new row at the bottom of the spreadsheet.\u00a0 Project your revenues and costs as in the original exercise.\u00a0 Then consider that an operating entity should be able to generate a ten percent operating profit based upon revenues – and add a row to your spreadsheet immediately below \u201coperating profit\u201d that calculates 10% profit from sales each month.<\/p>\n

Something new emerges<\/strong><\/p>\n

Compare that with the operating profit as calculated, which surely will be lower, probably negative, for months or even years.\u00a0 The difference is something new \u2013 a target for reduction of expenses or addition to revenue for each month in which the calculated number is lower than 10% of revenues.<\/p>\n

Why this is different and powerful<\/strong><\/p>\n

[Email readers, continue here…]\u00a0 \u00a0<\/em><\/span>We are not taught to think this way, but rather to find the month in which we break even in our plan, then calculate the accumulated losses to that point, add all the cash needed for investment in fixed assets, and end up with the \"\"amount needed to finance the business through equity or debt financing. \u00a0This new tool gives you that number plus <\/em>the amount needed to make the business a viable entity with a chance of long-term survival and growth.\u00a0\u00a0 The longer the time it takes to break even or get to that magic ten percent net, the higher the number of dollars needed.\u00a0 Sometimes, the difference is a reminder to consider a reduction of expenses if revenues cannot be raised from projected levels.<\/p>\n

The ultimate reminder<\/strong><\/p>\n

And sometimes, this exercise is just a reminder that we are all in business to make money, not to just break even.\u00a0 Just like assuring that your own at-market salary is included in a forecast even if not drawn in cash during the earliest periods, the 10% target reminds us all that the target must be higher than merely breaking even, even if that means reassessing all expenses until the target is met or exceeded.<\/p>\n","protected":false},"excerpt":{"rendered":"

How planning is done today Most entrepreneurs and managers, when modeling their business operations using a spreadsheet, start with expected revenue by month.\u00a0 Then they calculate cost of sales, and then project their expenses, to find the bottom-line profit or … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[11,20],"tags":[],"class_list":["post-4476","post","type-post","status-publish","format-standard","hentry","category-growth","category-protecting-the-business"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/4476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4476"}],"version-history":[{"count":0,"href":"https:\/\/berkonomics.com\/index.php?rest_route=\/wp\/v2\/posts\/4476\/revisions"}],"wp:attachment":[{"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/berkonomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}