What $5-$10k Months Look Like in Business
When you first get into business, one of the first benchmarks is typically to make $5k a month.
But when you account for taxes and operating expenses, the goal of making $5k a month usually increases to $10k a month.
In this episode, I give a breakdown of how you can allocate your income when you make $5k- $10k a month.
Follow me as I pull out my paper and calculator to crunch numbers related to…
– Business Expenses
– Business Savings
– Take-Home Amount
See what a $5-$10k month in business actually looks like as I pull back the curtain on numbers reality.
If you are trying to get to your first $5k or $10k month and have questions, please put them in the comments below. I love to hear from you.
So a little bit ago I did an episode about what does it look like when you make $100,000 a month and like how that money shakes out.
I got so much feedback from you guys and you were like, “that was awesome, but what about when it’s like a lot less than that?”
And so I thought I would do a little bit of a deep dive into when you’re making those first $5k, $10k like how does that money get spent, what do you expect? Hopefully, that relates to you guys because it wasn’t really that long ago.
In fact, I’m sitting here in my office and it was just a year ago that I got into this house. It wasn’t that long ago with the memories are still pretty fresh for me.
I feel like the first benchmark for an online business owner is can they make $5,000 in revenue a month? I don’t know what part of the country or the world that you’re living in. I know for me, $5,000 a month was not enough.
Not Enough in Connecticut, not enough for four kids because even if I could make my profit really, really high, and my expenses really low, 30 percent of that was immediately going out to taxes and I needed a minimum of $6,000 a month.
So I would say that the real benchmark that you’re looking for if you’re not looking to make like mad money and you just want to have a full-time living, I think that the 10k a month mark is the mark you want to shoot for.
So I got my little trusty pad notebook out here because I wanted to kind of show you what I think.
And this will work primarily for an online business, especially for a service provider business. Other types of businesses have more overhead.
So I’m just going to give you kind of what we do.
So let’s just talk for a second and let’s just say that you want to reach $10,000 a month.
Believe it or not, in the service business. That’s actually not that hard to do. I mean, just a couple of clients, a couple of websites, a couple sales pages, a couple funnels, and you’ve got your 10k.
So what actually happens to that 10k once that revenue comes in? So this is what I would do first. The very first thing is you’re going to look at your expenses, right? And what does it cost to actually run your business at 10k.
For most of you, especially in the service industry, it shouldn’t cost you more than five to $500-$600 a month. That would be my guest. So we’ll just do $500 a month.
And of course, this is assuming you don’t have a team. And I think it’s pretty reasonable that a service provider can make 10k without a team. Once you get beyond 10k, it’s pretty hard to do without a team.
That puts you at $9500.
Then we have to think about taxes. Unfortunately, depending on the state you live in, I’m gonna say about 30 percent taxes. And that’s about what? $2850.
Okay. And so if we take that and you’re at about $6,650, that is essentially your take home, right? That’s what you’ve got and most people can live on about $6,000 a month.
And if you want to kind of break it out between rent and mortgage and health insurance, if you have to get your own health insurance and then living expenses.
Most of us can handle this amount. If you want business savings, and I’ve talked about business savings, how important it is to have that rainy day fund in case your clients dry up, you may actually want to take anywhere from 30% to 50% of this money and put it in a business savings account.
And some of you might be like, well if you do that, then you don’t have as much. And that’s true. So if you want to have a nice cushy business savings account, you may want to shoot for 15k to 20k months. That might be your next goal.
But remember the more you go above 10k, probably you’re going to have to hire contractors.
So there is this like weird situation and just so you know this not to get freaked out when you start to go from solo to team, temporarily you have to build out a team which means your revenue goes down.
So it makes sense to really try to get to 20k and try to get to 30k and 40k because then it’s you’re better able to sustain that team.
But in general, guys, keep your expenses as low as possible. Account for taxes and put it in a tax savings account.
And then whatever is leftover, take 30% to 50% of that, put it in a business savings account and then live off the rest.
Just so you know, the very first when I first got started and I was making $4000 or $5,000 a month, I didn’t have one bit of business savings.
It wasn’t until I really crossed the 10k mark that I started to be able to think about that. So don’t feel bad if you don’t have business savings right away. Just make sure that you account for your taxes before you go spend that money.
You guys know that I like to pull the curtain back. I don’t like to pretend and fluff out the numbers, so I’m sure you have questions about this.
If you are trying to get to your first 5k or 10k month, put your comments below. I love to hear, what you guys think, what questions you have. It helps for further episodes.
And I also liked to respond directly. So put your comments below and for more episodes like this, including the original, what it’s like to have 100k months, you can go to Juliechenell.com.