Let's Do the Math: Your Target Number

The most successful business owners have a crystal clear picture of where they want to be in three years and what they need to do today to get there. They also have a target "number" to track their progress. 

Do you have your target "number" ?

Maybe not. A target number is one of those things that you keep thinking about doing right after you finish binge-watching season two of The Crown. 

For us to be able to have a conversation here about small business success, we need a basic understanding of the one number that rules them all:  After Tax Income. 

After Tax Income is the cold hard cash you can spend, save, invest or donate. It's the number that tells us if this crazy decision to run our own business is worth it. 

While it's easy to look at total revenue, that's only part of the picture. 

At some point, all the benefits of working for yourself need to outweigh what you get working for someone else. After Tax Income is the best financial gauge (although there are many more intangibles) of how your business is doing. It is the "apples-to-apples" comparison of working for yourself versus working for someone else.  

Your After Tax Income

Let's start by calculating the past 12 months of After Tax Income. This should take you less than an hour to calculate (we hope!).

Start with Revenue. This is the money you collect from the services you sell.

Subtract Expenses. These are all the costs that you have to pay in order to deliver the services you sell. This includes sales and marketing expenses, services and subscriptions, communications, insurance and any supplies you need to deliver your revenue. 

Subtract Taxes. This step is critical. Plan for at least 20% for taxes and pay them quarterly, if not sooner. 

And ... Calculating — Wait For It ... One More Second ... You Have After-Tax Income

This is it. The more often you track this number, the faster you'll see results. And we're here to make this discipline easier. Want to share your number or recent calculation below? Perfect. Members are standing by.

Before you go

QB Community members, how do you motivate yourself to track your numbers on a regular basis? Your tips might help others get going -- so thanks for sharing your ideas below.