What you are seeing
The figures are invented to show the pattern. They are not what any business should expect.
| Sales | R115 000 |
| Break-even sales without your pay (40% gross margin) | R115 000 |
| Take-home you took | R0 |
| Take-home you need | R30 000 |
| Break-even sales with the R30 000 you need | R190 000 |
The business needs R75 000 more in sales each month to pay you what you need.
What it could be revealing
| It could be revealing | How to tell | You could |
|---|---|---|
| The business is not yet viable at today's prices and volume | Sales against break-even including your pay | Set a date to reach it and write down what must change |
| Prices are too low for your time | What the business earns per hour of your own time | Raise prices, or narrow the work to what pays best |
| Fixed costs are too high for the sales | Every fixed cost, listed and ranked | Cut or renegotiate the largest first |
| You are reinvesting on purpose | Whether there is a written plan and a date | Write down the date you will start paying yourself |
| Savings or a partner's income cover the household | How many months your household savings would last | Work out that runway and decide when it becomes too short |
Check these first
- Paying yourself: what is the gap?
- Break-even: is your pay inside it?
- Runway: how long can the household carry it?
Questions people ask
When should I start paying myself?
As soon as the business can carry it without cash falling. Work out break-even including the pay you need, and set a date to reach it. Until then, know how many months your savings would cover.