That is a great question without an answer. Or at least not an real good answer. You would think, hey you got some money and you paid your bills if there is anything left then you are profitable. I don’t want to get to technical, but it is a lot more complicated than that. I didn’t understand the complexity of answering that question before I started. Today is February 17th. Here are my numbers from the beginning of the year, about a month and a half.
Sales: $ 43,253
Expenses: $ 41,743
Profit: $ 1,509
OK so at this very basic level we are profitable. BUT! There is more. Included in the expenses are $3,000 in “distributions” essentially money I paid myself. So I guess we have made $4,500 in a month and a half month. That works out to $36,000 per year or roughly $18 per hour. That is not enough to live in LA. I went back and looked at last year’s numbers for the same time period.
Sales: $ 41,206
Expenses: $ 38,271
Profit: $ 2,934
And I took out $2,151 so you might say that I made $5,000 last year during the same time period. Well that is worrisome. Why am I making less?
I used to work at Hi-Tech and Finance companies. I am too analytical. One thing I preached all the time was analytics was only useful if it helped make a decision. I believe it is important to have the business decision that needs to be made before the analytics are reviewed. I want to make more money. So what am I willing to do about that. I either need more sales or less expenses (or is it fewer expenses?) Sales were a little higher. Do I need more customers? (Advertising/Marketing) Let’s see last year during the time period I had 1,987 customers and this year I had 2,063 customers. So that is improving but only by 3%. Maybe that is where I need to focus. Expenses as a percentage of sales did grow, but I am pretty sure I know why. Last year we raised our rates on our mailboxes and we gave everyone an opportunity to pay as far as a year in advance at the old rate until March. Mailboxes are highly profitable so even though our sales are up our sales of Mailbox service is down.
Mailbox Service Sales
2015: $10,321
2016: $7,997
Now looking at the bigger picture whether the number is $4,500 or $5,000 both numbers are way too low. We are making progress, but I need a much bigger jump in sales, like double. I need to buy out some local competitors. That will have to be another post.