Turning needs into numbers

This is the second note on setting realistic and reasonable goals, starting with covering your basic needs each month. Now that you have your basement expenses (missed last week? Find more info HERE) established, let’s look at what you need to write in sales to accommodate that number.

For this example, I’m going to assume you are paid on written sales.

If your “nut”—what you need to bring home—is $5,000 (your net income), add 25% to that number to calculate your gross income before taxes. That’s the number your written business needs to support.

In this case:

• Net income needed: $5,000
• Gross income needed: $6,250

Next, calculate what you need to write based on your commission percentage.

To gross $6,250 at a 6% commission, divide 6,250 by .06.

That gives you $104,166.

That is the written sales amount required to cover your basic expenses.

From here, you can begin building toward your goal number.

Use the same commission math to calculate what you need to write for comfort, not just survival. For example:

• Writing $125,000 at 6% commission
• Equals $7,500 gross
• Or $5,625 net

That’s your next level. The number may feel high—especially if it’s more than you’re currently writing. That’s okay. For now, focus on getting clear on both numbers:

• Your basement written number
• Your goal written number, which will be higher

Clarity comes before confidence. Now, go be stunningly honest with the numbers.