What does survival really cost?
Most owners underestimate their survival number because they only think about rent and payroll. Real survival includes the loan payments, the taxes, and the money you actually need to live on. Leave those out and your target is fiction.
What do you add up?
Build your survival number from the full list of what truly has to be paid every month.
- Fixed overhead: rent, insurance, utilities, software, base staff
- Loan and equipment payments
- Estimated taxes set aside
- A reasonable wage for you, the owner
How do you turn costs into a sales target?
Take everything that must be paid and divide it by your gross margin percentage. Say you need $30,000 a month to cover it all and you keep 40 cents on the dollar. You need $75,000 in sales a month to truly stay alive, not just to break even on paper.
What if you are below that number?
If your sales sit under your survival number, you are not failing, you are getting real information. Now you can decide whether to raise prices, cut costs, or change your mix of work. The number tells you the size of the gap so you can close it on purpose.