As a small business owner have you sat down and calculated how much you make per hour? There’s a lot to take into account! Let’s break it down.

Start with your expenses. I’ll do the bridal shop for an example.

• Sample dresses
• Designer wholesale cost
• Rent (includes CAM, water etc)
• Utilities (electricity, phone, internet)
• Payroll
• Shipping
• Office supplies
• Credit card processing fees
• Marketing

Ok so let’s figure out the net profit based on gross profit. Net is the amount you make after you take away all your expenses, which are roughly listed above.

Gross sales for the month = $40,000

Expenses broken down:

• Sample dresses (let’s say 5 new ones arrived @ $750/each) = $3,750
• Wholesale cost of dress sales = $18,000
• Rent = $2500
• Utilities = $500
• Employee pay = $3,000
• Payroll = $7,000
• Shipping = $350
• Office supplies = $150
• Credit card processing fees = $900
• Marketing = $250

Total expenses = $36,400
Net profit = $3,600

I kept off tax and any retirement contributions because I want to keep this a little more simple. So if this were an average month and it was consistent across the board, a profit of $43,200 a year is decent. You haven’t lost money and that profit can be put back into the business through COGs (sample dresses), training and hiring staff, paying yourself more, advertising etc. This could also be used towards an expansion or finding a second location for the business.

Ok so let’s break it down to how much you’re making an hour. Say the store was open five days a week from 12-7pm. That’ll be 35 hours a week. We can look at this from a gross perspective first, which is $40,000 divided by 140 hours the store was open for the month. This is $285 an hour.

Now let’s break it down by the actual profit made (minus taxes, retirement which is not included). Net profit is $3,600 divided by the same 140 hours. That is $25 an hour, which is being cleared. Again, this is decent!

What are your goals for a business? Expansion? Efficiency? Maximum profit per hour? There are so many variables here and you’ll only be able to reach your goals once you know your numbers. This is always number one. You can have passion all day long, but if you’re wasting money or not making enough sales to keep the doors open, that passion will only become a short lived hobby.

Some business owners prefer to be a solo act, but at some point if you want to make more money, you have to decide when it’s time to work ON your business rather than just IN. I always liked working in my business, but to look at the bigger picture, I had to hire a manager and let that machine run.

Starting a business takes grit. It comes in phases and levels. It took me a few years to start leaning things out to make the store more efficient while still offering the best selection of dresses, having a good and well compensated team and keeping a growth mindset.

So who should you have in your corner? A good accountant for one! You could start out with Quickbooks, which may be more cost efficient. However, once you find yourself spending hours calculating expenses and figuring out taxes, it’s time to hand it over.

Your account can and will find your weaknesses in numbers so you can see what’s going on. I had a great guy for years and we would do check-ins from time to time to see how the year was looking. Then I would hound him with questions to help reduce any taxable income. Every dollar earned was a dollar I could use for not only the business, but for my retirement and everyday living.