We are on episode 6 of the 31 Day Courier MBA series. This is the fourth episode in our section on Creating Your Business Plan. You can see a semi-transcript at DeliverOnYourBusiness.com. Here are show pages for previous episodes.
The Schedule: Episode Schedule for the 31 Day Courier MBA Series
Episode 1: Introducing the 31 Day Courier MBA - Mastering Your Business Attitude
Episode 2: Who Are You? Understanding the Independent Contractor relationship
Episode 3: Why Are You? Creating a Mission Statement
Episode 4: Where Are You? Understanding Your Market
Episode 5: Don't Put All Your Eggs In One Basket - The Importance of Diversification
Episode 6: Is it Enough? Creating an Hourly Goal For Your Delivery Business
We encourage you to visit our contact page to leave comments or questions, either by email or by clicking the microphone and leaving a voice mail. You can also comment on the episode pages on our site, linked above.
We talked in Episode 5 about understanding your earnings potential in your market. Today we have to ask, is it enough? Can you earn enough to meet your needs? Today we hope to help you:
Understand the things you are not getting a lot of the things as an independent contractor that you would as an employee.
Understand that we need to evaluate our earnings not on a dollar total, but on an hourly earnings.
Understand how to evaluate how your independent contractor earnings compare to a 1099 job and use that to determine a realistic earnings goal.
Challenge yourself to set a goal worthy of what you do
We are on episode 6 of the 31 Day Courier MBA series. This is the fourth episode in our section on Creating Your Business Plan. You can see a semi-transcript at DeliverOnYourBusiness.com. Here are show pages for previous episodes.
The Schedule: Episode Schedule for the 31 Day Courier MBA Series
Episode 1: Introducing the 31 Day Courier MBA - Mastering Your Business Attitude
Episode 2: Who Are You? Understanding the Independent Contractor relationship
Episode 3: Why Are You? Creating a Mission Statement
Episode 4: Where Are You? Understanding Your Market
Episode 5: Don't Put All Your Eggs In One Basket - The Importance of Diversification
Episode 6: Is it Enough? Creating an Hourly Goal For Your Delivery Business
We encourage you to visit our contact page to leave comments or questions, either by email or by clicking the microphone and leaving a voice mail. You can also comment on the episode pages on our site, linked above.
We talked in Episode 5 about understanding your earnings potential in your market. Today we have to ask, is it enough? Can you earn enough to meet your needs? Today we hope to help you:
Understand the things you are not getting a lot of the things as an independent contractor that you would as an employee.
Understand that we need to evaluate our earnings not on a dollar total, but on an hourly earnings.
Understand how to evaluate how your independent contractor earnings compare to a 1099 job and use that to determine a realistic earnings goal.
Challenge yourself to set a goal worthy of what you do
Hey there. Welcome to the Deliver on your Business podcast, where you are the boss. I'm Ron from EntreCourier.Com. Entre is from entrepreneur for somebody who is in business for themselves. And here's the deal, folks. If you're an independent contractor, you are operating a business, ready or not. So that makes you an Entre Courier. Welcome to the club. This podcast is here to help you think like a business owner and to thrive in your business. So let's get started, shall we? Why hey there, Courier Nation. We have made it to the weekend. We are four down, two to go in the business plan portion of the 31 day Courier MBA series. Time is flying, isn't it? The first three episodes, we talked about the who the why the where of your business. And yesterday we talked about identifying what kind of opportunity and revenue streams you could have in your market. What can you earn? So now that we've talked about what you can earn, now we got to ask our question. is there enough potential to meet your goals and do you even have a goal? So let's talk about setting a goal today, okay? We'll dig into setting a target. We'll dig into understanding what you need to have when it's all said and done and whether or not you actually make what you think you make in the gig economy. Some of that might surprise you, and some of it can be kind of sobering. What we do today, we'll give you a basis that you can build your operations on. You can use this goal that you set to determine all sorts of things, things about the deliveries you take, the ways you spend your time, even things like what kind of route you should take. It's a basis that you can build your business decisions on. Because what we're going to do is try and create a method to build a time based goal that you can use and other aspects of running your business. You want to get the right perspective on evaluating your earnings. Now, how many times have you seen, or at least have I seen in a forum, somebody asking something like, hey, I made $150 today. Was that good? Like, there's no other information here. I can't make any kind of evaluation on how it is and how far did you drive? And for some people,$150 could be a fantastic day, especially in just a few hours. And others that could be horrible. There are so many other pieces to the puzzle there. So that's the kind of thing that I'm trying to get across today is that we want to get away from evaluating based on just an amount, because the amount by itself isn't enough. Too many people make the mistake of they're going to focus on I'm going to make this much in a week or I'm going to make this much in a day. And it's that amount that they made that you base your evaluation on, and it's just really hard to get a good picture unless you've got other pieces to it. So what I want to encourage you to do is to make your goals hourly, not daily or weekly. I really recommend doing a time based goal. It is so much more objective. You can tell more about$20 per hour over 8 hours. That tells me so much more than just saying I made $160, whatever. It took 14 hours to that $160. You know what I mean? And you can also break that hourly goal down to a per minute goal. I really push. I call it the $0.40 rule where you strive to make $0.40 a minute, and that comes out to $24 an hour. And I use that 40 cent rule to evaluate all sorts of things, like the deliveries that I'm going to take or other types of decisions. And we'll get into that 40 cent rule in a little more detail in a couple of days. Now, I know that I really push that whole business owner mindset, but I'm going to tell you that most of us probably still have a little bit of that hourly employee mindset in our minds. And I want to use that today. I want to use that to help us start thinking about what kind of goal do we need to set? I know we're self employed, but there's no avoiding the fact that a lot of us still think in terms of we've had the experience with that traditional job, the W2, the annual salary or the hourly pay. And that's okay. Let's use that. Okay. So ask yourself this question, if you were doing a regular job where you were an employee and if you had everything kind of reimburse so you didn't have to pay stuff out of your pocket, what do you think a job like this should pay? What would you expect to earn doing this kind of work if I were hourly or salary? What do I think that I should be making on an hourly basis? Hopefully you can kind of see why I use that job comparison, because that's kind of the frame of reference that we all have. We think like that. We think of that job that pays so much. And a lot of times we compare what we do as independent contractors. We compare that to an hourly job. So I want to use that as the basis to get started. Okay. And when we get started, what that does is that gives us something to compare to what we're doing as an independent contractor. Now, let's take a look at what we're not getting as independent contractors. And we went into Episode two into the Who Are You episode. We went a lot more into detail on what an independent contractor is. So you may want to go back and refer to that, but as an employee, you have the right to things like overtime pay. You get a lower tax rate. You get paid time off for holidays. You get vacation and sick days. If you're full time, especially working for a larger company, you're going to have certain benefits, usually like health insurance, maybe retirement. You get the picture here. You get all of these things. We don't get any of that as independent contractors. So when we start comparing, we've got to take that into consideration. We've got to take into consideration the things that we don't get. And we need to take into consideration our expenses. So let's start by adding things on to the pay that you decided what you think we should make. Okay. So let's say if you started off with that $15 an hour, that that's a reasonable amount to expect to make. Well, now let's start with your taxes. You have additional payroll taxes as a self employed person, and you're looking at probably 20 days off a year, maybe more, maybe a little less. But we'll just say 20 days a year as time off or things like paid holidays or vacation or sick days and a lot of jobs you're going to have that. What about your expenses? Your car costs you an awful lot more than just gas. And so you want to make sure that you are getting covered with a real reimbursement for your car. And so here you go. You're doing probably about 10% more to cover those extra payroll taxes you've got to do. You probably another 8% to cover those paid days off that you are not getting. And then you've got about 25% to cover your expenses. And I think for most people, is going to be actually very conservative. We haven't even touched on the benefits yet. And we're already at 43% so just for simplicity right now, let's round that up to 50%. So what does that say? That says you've got to earn 50% more as an independent contractor to have essentially the same earnings as you would as an employee. When it's all said and done at the end of everything, a $15 an hour job is going to be the equivalent of somewhere about 22.50 an hour as an independent contractor. Let that sink in. Think about that for a minute, 22.50 that you've got to earn doing this gig work to be on the equivalent of about a $15 an hour job. You've got to grasp that. You've got to really understand that because it's sobering, for one thing. But it is the reality of being an independent contractor. We are not making as much as it looks like. And so you've got to set that bar higher because of that. Now, obviously, you can do some more detailed numbers and you get a more specific picture. But it can be kind of hard to swallow that we're earning that much less than what it looks like on paper. And the bottom line is you have to make a lot more than you thought to have the same earning power. Okay. So we talked yesterday about revenue opportunities and started thinking about how much can you make in your market. And so now we've got to kind of combine that with that need to be about higher than our normal hourly amount. And it's like you've got to ask your question, is that enough? First of all, is it possible to make that much money? You've got your goal, you've got that amount. You increase that by you got to ask yourself, is it possible to make that much money? And you've got to be honest with yourself how much opportunity is really there? And is that going to be enough for you? So what do we do with that? Now? There's two ways that we can go with this question. One is that you can see the earnings, and once you properly compare them to the work that you're used to doing, they just don't add up. It's not enough. It's not sustainable. It's not something that you can make in your market. I think there's places where that may very well be true. And you know what? It's okay to recognize that with any business opportunity, sometimes the most profitable thing you can do is to realize that the opportunity is not that profitable. And so there's a time when maybe you say this isn't the right thing. For me, the other response you can take from that is you challenge yourself. And here's the thing. We think too small in our industry, with our driver community. We think in terms this is only delivery work, and we think in terms of probably smaller pay than what we ought to. But again, we get back to that $0.40 rule. When you start to use that as a filter for the deliveries that you're going to take, things like that, you can be amazed how you can hit a goal simply by going after it. Now I know that there's some adaptations out there. People have looked at that 40 cent rule, and they said, well, maybe you might have to start at $0.30, because the $24 an hour at $0.40 a minute does seem kind of high, doesn't it? So maybe start with $0.30 or $18 an hour. And I get that. And actually, when I first started thinking in terms of that gauge like that, I started at $0.30. But here's the problem with starting at $0.30. Let's go back to the map that we were doing earlier.$0.30 a minute, $18 an hour is basically the equivalent of a $12 an hour job. And that brings us back to that question, is that enough? Is a regular $12 an hour job enough to take care of you? Because if it's not enough to take care of you, $18 as an independent contractor is not enough to take care of you. When you look at it that way, that $24 an hour goal. That's not quite as high as it first seemed is it think Big Courier Nation. You have got this. So now you've got a goal. And soon we're going to start digging into ideas on how to achieve that goal. And here's the deal, folks. You are far, far, far more likely to achieve a certain amount. If you've got that as your goal, then if you don't. Now, this wraps up five now of our six episodes in the business plan. And tomorrow, maybe we'll dig a little more into that idea that we talked about about. What if it's not enough? Because what we're going to do is we're going to start looking at creating an exit strategy. What do you do when it's time to to hang it up? What do you do to maybe find other opportunities that will do more for you later on? So I want to thank you for tuning in and joining us. Come on over to the website and check us out. You can scroll through previous posts over there. You can look us up on Twitter, Facebook, or even linked in by just searching for Entree career. And you can look for our podcast on all of the main podcast channels. So as I always do, I like to save this part for last because I want to make sure that I've earned the right to ask this. I want to make sure that I provide useful information. And if I have provided good information, if you found any of this useful at all, can you spread the word about us? Share this on social media. Tell other people about us. Let them know, especially if you know people that are doing deliveries. Let them know about what we're doing here. And you can go leave a review of the podcast wherever you get your podcasts from. And those reviews help us get found. But if you can spread the news, then that will help us help other people succeed in their business. One final thing. Please go out there, take control of your business and go and be the boss.