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.
You have your target "number," right?
If you are anything like me, you do not. A target number is one of those things that you keep thinking about doing right after you finish binge watching season three of Scandal.
The reality is that we're better at building these goals and financial targets in a network with other small business owners and self-employed professionals. That's why we we've created QB Community. It's faster -- and more fun -- to share our stories and remix the experiences of others into our own decisions.
This post is perfect for members who are ready to take their business to the next level as part of defining your Main Goal and launching your Morning Ritual.
Let's Get Started
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 and was very enlightening when we did it for ourselves recently.*
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. I always put off this step, but it's critical. Plan for at least 20% for taxes and pay them quarterly, if not sooner. It's a pain in the ass, but steering clear of the Tax Man is worth it.
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.
Know Your Number
As you share your goals with other members here in QB Community, ask not for advice, but rather for them to share personal stories of what they are doing that's working. As new ideas are sparked for you, then you can share what's working and what's not for others to tap as well.
While "circle of learning" sounds too cheesy, that's exactly how this community can become your secret weapon of success.
Do *you* have a number?
If you don't do anything else today other than calculate your After Tax Income number, declare victory. It's one of the most important things you can do.
*When I did this recently, I was so embarrassed by what I was spending on Vanilla Lattes per month that I bought my own machine and got a mug. It continually amazes me how small expenses add up. And makes me want to open a coffee house, too.