How Many Sales Do You Need To Make The Profit You Want?

How Many Sales Do You Need To Make The Profit You Want?
December 7, 2017 Biznostics

A question we often get asked is how many sales do I need to make to make the profit I desire?

So what is that magic number for you?

Most business owners are wishy-washy with their sales numbers and will either just take whatever that comes their way or they think ‘as much as they can’.

However, if you are able to know the specific number to aim for, you can focus your efforts on getting that number.

So what does it take?

Well, it is all about knowing your numbers.

There are a few key numbers that you need to take know in order to work this out:

1)  Gross margin.

This is the percentage profit that you make in selling your product or service.

2)   Expenses

What are your average overheads per month? How much does it cost you to run the business?

3) The amount of money you plan to take out of the business

How much money per month do you want to withdraw for yourself as a business owner?  This may be as drawings, a salary or a dividend.

4) The amount of money required to keep the business growing

How much money do you need to make to keep moving your business forward?  This may be for working capital, expansion or just to build up a buffer to allow for downturns or seasonality.  

So how do you work out your number?

Firstly, we need to sum up the total dollars required:  

Total profit required = Expenses + Amount of money you want to take out + Amount to Keep Business Growing

Next to work out your sales required:

Sales Target = Total Sum / Gross Margin % 

This gives you the sales target you need to hit to meet all your business needs.

 

P.S. Whenever you are ready here are 4 ways we can help you build and grow your business:

1) Join the Construction Business Owners Network

It’s our new Facebook Community where business owners in the construction industry learn how to make their business more efficient, more profitable and more enjoyable to work at.   Click here to join

2) Watch the ‘From Business Slavery to Freedom’ Video Training

Watch this 20 minute crash course on how to take control of your time so you are more efficient, less stressed and have more freedom. Click here now to watch

3) Book Your 30 Minute Game Plan Session

Ready to take your first step towards business freedom?  Let’s jump on a call and brainstorm the simplest, quickest and smartest path to achieve your business goals.  Book your call here

4) Join our Business Freedom Program

If you’d like to work with us directly to create a business that makes the money you want and gives you choice of how much you work… email us here with the word ‘Freedom’ in the subject line and we’ll get you all the details.