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Make a table with five columns and six rows.
Columns are the following: Actual, PP%, PP$, the Bleed, and the Fix. Rows are the following: Top-line revenue, Materials and Subs, Real Revenue, Profit, Owner’s Pay, Tax, and Operating Expenses.
- In the Actual column, enter your top-line revenue for the last twelve months.
In the Materials and Subs, write your cost of materials, excluding labor costs for the last twelve months.
If your business depends on subcontractors, you can put the expense of subcontractors in this cell. If you are a service company, leave this area blank.
Subtract materials and subs from your top-line revenue to get the real revenue.
This is the real money that your company makes. Real revenue is different from gross profit.
- Copy and write down your Actual profit for the last twelve months in the Profit cell.
- In the Owner’s Pay cell, write down how much you paid yourself these past twelve months.
- In the Tax cell, write down how much you paid in taxes plus any money you reserved for taxes.
In the Operating Expenses cell, add up the total expenses you paid for the last twelve months.
This is everything except for your profits, owner’s pay, taxes, and any materials and subs you already accounted for.
Double-check your numbers.
Adding up your profit, owner’s pay, taxes, and operating expenses should result in real revenue.
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