Friday, October 17, 2008

Match Making Ins and Outs

A lot of what I’ve talked about so far on this blog has not looked primarily at the issue of making money; I’ve considered it as a necessary thing that must come from my activities because I must pay the bills, but I’ve largely focused on issues of quality of non-material life.

However, I feel it is very worthwhile – necessary - to take a good look at what your dreams will actually cost you in cash terms also – we need practical paths to achieve the things we want and unless we plan to find a place where bartering is the currency, we’ll still be looking at paying bills the common way, with our earned cash.

So, following on my previous post, let's estimate how to juggle our various income earning options to allow us to achieve our needs and goals. I’m going to use my activities as an example – just because it makes it easier for me to show you using an example I’m more familiar with.

So we need to take some figures from Tuesday’s post – I’ll insert some theoretical figures assuming a nuclear family of one child and two working parents.

Say our share of monthly repeating expenses added up to $3000 per month – 36,000 per year

Additional regular yearly expenses come to another $10,000

And our things we’d like to be able to cover add up to around $10,000 - Our total so far is $56,000 and we’ll add in 20% contingency of $11,200 totalling $67,200 – that’s what we want to earn as our salary from what we do to live the life we desire.

In other words
$6,109 per month (working 11 months per year)
$1,400 per week (working 48 weeks per year)
$280 per day. (working 5 days per week)

Remember that’s our salary, not our gross sales. Now we need to know at least a rough cost of our production – and that’s another post, for now, lets assume we make 35% above our costs that we can pay ourselves:
that $280 per day = 35% of our gross sales,
which means our gross sales is 280 divided by 35/100= $800 or monthly, $17,454 per month.

So you now know you need to bring in $800 per day in sales. If for instance you run a shop, then that’s exactly what it would translate to, just sales. But if you do several things like me, it becomes a bit more complicated because you have to do some juggling with figures to find a combination of activities that you can realistically achieve.

I do the following things that bring in money:

Make jewelry

Making jewelry is my day to day job I don’t have all the buyers I need yet, but for this calculation that doesn’t matter – what I need to look at is what I make – and that falls into roughly 2 categories – batch production pieces and one off art pieces.

Consulting I speculate for and hope I get a few jobs a year
Training I do a little more regularly – say 6 times a year.

Lets assume at this point I know roughly how many batch production items I can make a day and how many art pieces I make a month and we’ll work in months because much of what I do does not get done daily or even weekly:

My normal production is about 10 batch pieces a day = 10x5x48/12 per month = 200 per month@ $40 each = $8,000

That leaves us with 17,454-8,000 = $9454 still to make.

I know I make about 3 Art pieces a month and they average $200 each = $600, leaving $8,854.

I know I train once a month and make $2,000 per session – that leaves $6,854

I know I do 2 consultancies a year each earning about $12,000 in fees – that’s pure salary, I charge expenses separately so that’s $24,000 per year = $2,000 per month.

But to be prudent lets say 20% of that is costs I had not foreseen or cannot charge for – then I still have $1,600 in real salary.

The remainder left prior to looking at consulting fees was $6854 in gross sales – of which 35% only goes towards my salary –that’s $2,398 – therefore after counting in my consultancy fees I still need $738 in actual salary which we can re-calculate = $2,108 in gross sales.

Looking at my figures I can see fairly easily what would happen if I up each type of work. If I do 2 more batch production pieces a day I will earn $1,600, if I add on 3 pieces per day I produce $2,400 a month – that’s enough. Alternately if I add 1 more training session I could add another $2,000. I would have to do 3 ½ times more Art pieces or if I did one more consultancy I’d get $800 in real salary and that would be enough.

At this point  you have quantitative choices – you have to know which option is more likely to not just be possible for you to physically manage in terms of your time, but which options you are more likely to get a sale for.

Whew! Let’s leave it here for today – I’m travelling to St. Lucia tomorrow, so I may not post again until Sunday or Monday – may I suggest if you are finding my blog interesting, that you subscribe (at the top left of the page) to the email notification and you’ll get a short email letting you know each time I’ve posted! It really is motivating to hear from you and to be subscribed to is just a great feeling!

Please do ask any questions if anything I’ve said doesn’t make sense to you, or share your alternative views on this with us – I know this isn’t the only way to look at this, I’d love to hear from you too.

And our final Alphabet Attitude for today and always has to be Z is for Zenith – where we’re all going!