a guy earning 65$/hr will go broke if he is spending 66$/hr.
the hourly rate is irrelevant. what $50 will buy u in CA is different than what it will get u in MA. And a guy earning $50/hr might actually be making twice as much as the guy earning $75/hr.
One of the main reasons I see ppl go broke is because they dont understand enough about budgeting or profit and loss, to be able to narrow down thier expenses correctly, thus telling them what they actually need to earn to turn a profit.
Most don’t even know what thier expenses are. There is software out there that would do all the math, but for some, just the data entry is difficult. (what budget do gas charges come from? or labor? or advertising? etc)
Ppl say, “I aim for 100$/hr!” - ok, but why? what are your costs? why that amount? Truth is, (from my experience) most don’t know why, they just like that big number and think that if they make that, then they will have enough. Or, they might even be comparing it to when they made $20/hr at that old job where they were an employee and with that “little” amount, they got their bills paid, so surely $100/hr means they will have some left over.
Anywho… u asked about a monthly/yearly rate… i am not solo… but i know our daily rate for costs is $39/vehicle. ($663/month) … and that’s pretty low… (when I was solo, it was slightly less)… and that of course doesnt include growth or accruals (labor). So a quick example based on my numbers to illustrate why some go broke…
say u want to buy a new pole that cost $40. Not too expensive! Say u do only 1 job and earn 100$ and it took u 1 hour. You can surely afford that pole right? AND you should have some left over for your pocket right?! I mean come on! You just “made” $100!! … well let’s see…
100- 30%(taxes/growth) = 70 left
70 -38 (daily costs/expenses)= 32 left
So far you only have $32 left…
So if you did that “$100/hr” job by yourself, then u actually only made $32/hr (after all costs) so…
if you buy that pole, you are now negative dollars and broke, it gets worse if you paid someone $12/hr to that job (labor) then you are down to $20 and cannot even afford 1/2 the pole! Imagine if tiki needed 1 pole and a new squeegee and you bought both without knowing these numbers. You can see how it could spiral downwards.
Now the saving grace is most of us do more than $100 per day… but the results can still be disheartening…
say you worked 8 hours and made 500$. (i see lots of videos on that!) that is $63/hour (uh oh! thats already alot less than our first example).
But… we will leave the daily rate the same, just for kicks…
$500 - 30% for taxes/growth = $350
$350 - $38 daily rate = $312
$312 / 8 = $39/hr… you cannot afford to buy that pole until you have worked at least 2 hours.
now… if u paid someone $12/hr to do those jobs, then…$312 - $96 (labor)= $216
$216/8 = $27/hr… still takes 2 hours to buy that pole.
One more… lets meet in the middle… say u do $250 for the day and worked 8 hours… u already know how this is going to turn out don’t you?!
250$ - 30% (taxes/growth) = $175
$175- $38 (daily rate) = $137
$137/8= $17/hr … takes you 3 hours of work to be able to afford 1 $40 pole. And you only made a measly $17/hr net.
The all important lesson here is to know your “break-even” point. You cannot know that until you have accounted for all your expenses.
Gas, advertising, insurance, license, auto license, auto insurance, paper, pens, ink for printer, solution, squeegee blades, pads, phone bill, CRM, payroll, poles, razors, containers, shelfs, rubber bands, taxes, payroll taxes, auto repairs, tools, auto mainteance, uniforms, water bill, auto decals, wfp, attachments and so on. You should know these so intimately that if someone asked you what ur biggest expense was, you would know that without looking.