“The biggest takeaway I want you to think about in terms of launching your business is reframing this from how do I make the same amount of money I made at my W2 corporate job to how do I cover my living expenses, because there's a lot of different creative ways you can do that,” explains host Kiley Peters. Today, Kiley dives into a number of key business calculations and key performance indicators that every entrepreneur should consider when launching and growing their business. If you're looking to better understand your numbers, you won't want to miss this episode.
As an entrepreneur, you may not necessarily need to earn the exact same revenue as you had at your corporate job in order to cover your living expenses. Since you will be paying yourself, there are many different ways to work around getting taxed on everything. You will also have the opportunity to write off many of your living expenses like a portion of your mortgage or rent if you have a home office. Instead of looking at revenue, focus on AGI or adjusted gross income. This is how much revenue you actually make minus the cost of goods sold.
When it comes to KPIs there are many that every successful business owner really needs to know. You need to consider not only AGI, but also operating expenses, profit, cash flow, deliverable profitability, average sales, cycle length, average order value, cost per acquisition, average customer lifetime value, average conversion rates based off of the different stages of your sales cycle, the percentage of clients that repeat and how you're spending your time.
“When you're an entrepreneur, you have a lot of different ways you can pay yourself without getting taxed on every single dime.” (2:01-2:08 | Kiley)
“If you aren't growing your business or you're not actively trying to increase quality leads and get your name out there, you're not going to have any more business to do.” (12:17-12:27 | Kiley)
“Revenue really doesn't matter at all. What you want to focus on is AGI.” (18:37-18:41 | Kiley)
“We as founders are always our best salespeople. I know that's not what we want to be true, and we work hard to not make that be the case. But in very few situations have I found somebody else to be a better salesperson than the owner.” (31:38-31:52 | Kiley)
“The biggest takeaway I want you to think about in terms of launching your business is reframing this from how do I make the same amount of money I made at my W2 corporate job to how do I cover my living expenses, because there's a lot of different creative ways you can do that.” (32:31-32:46 | Kiley)