What do you need your delivery business to do for you?
I think there are two versions of this question that are both worth your thought and consideration: The short term and the long term.
How much do you need on an on going basis? That's the short term. What do you want to earn on an hourly or daily or weekly, even monthly basis?
Where do you want this to go in the long term? This is a broader look. It ties into the big picture you're developing of what your business is. It ties into your why. And it ties into what we'll talk about tomorrow: Your exit plan. This is where you're looking not only at finances but life itself.
Start with the big stuff.
You've already spent time on the big picture. Why are you doing this?
So let's ask this question: If your why were fully realized, where would that have you?
If you could just create your life as you want it to be five or ten years from now, what would it be? Think of a life that is in full harmony with who you are and why you are. You are fulfilling your purpose. What does that look like?
I don't know about you. I've found that for me, as I focus more on my why and focus more on quality of life, the money means less. I'm thinking in terms of a life that I'm happy in than I am things and stuff and dollars. Not that the dollars aren't needed, but it's different.
And then reverse engineer that into the day to day.
What is involved to get to that point?
How do you get there?
What does it take to get you there?
And then when it comes to the money – what do you need? What are you shooting for?
And how do you get to that point with your business?
Balancing time, money, and your why.
Here's some of what I meant about how money is just different.
There was a guy just a month or so ago who went out and made just under $8400 in one month delivering Uber Eats. That's a $100,000 per year pace (before costs etc).
That's pretty good money. He did it working 12 hours a day every day of the month. 84 hours a week. The beauty of gig work is, we can just put more time into it if we want to make more money.
I start thinking, hmmmm…. what if I…..
It's not going to happen though. Because of my why. I'm doing this to pay the bills so I can do stuff I'm passionate about. But if I don't have time left, that kinda defeats my why, doesn't it?
So for me, I focus on maximizing what I can earn in the time I do want to allow myself for delivery. I end up focusing more on my earnings rate, not my total dollars, because if I can earn what I need in 20 hours instead of 30, that means ten more hours I have for what I'm passionate about.
Some thoughts about setting earnings goals:
Here are some things that I think can help you develop your own ideas.
1. Set your goals high enough.
We limit ourselves too often.
We think we can't do something, and it becomes a self fulfilling prophecy.
Go back to thought number 1. I say that because too often, we're out there working in terms of the money coming in, and not the amount left over. I need $20 per hour, so we set our goal on the overall earnings, not what's left over.
I stumbled across this on a podcast episode by Rick Mulready yesterday – the timing couldn't have been better. He makes a point that a lot of times we limit our goals because we're afraid of how we'd feel if we didn't make them. He had a little different take on that – where he said that the important thing here isn't as much hitting those stretch goals as much as it's how the process of pursuing that goal allows us to grow.
I can't tell you what a reasonable hourly goal is in your area because I don't know your area. (We'll talk a bit more about that hourly goal thing in #4) To be honest I'm not sure I can tell you a reasonable goal for my area. I say that because I wonder how much I'm limiting myself.
All that is to say it's probably higher than you think it is.
2. Get an understanding of what your business is really earning.
We're going to be diving into that topic in more detail soon.
Episode 6 in the podcast talked about goals, and it also spent a bit more time on this topic than I'm doing here.
Here's the problem: we compare our revenue to our take home pay. We look at the money that Grubhub and Doordash and others pay us as our paycheck. But the reality is that when you take out your TRUE expenses, taxes, and maybe benefits, what's left over is quite a bit less.
Make sure you're factoring in things like the impact on taxes and the actual cost of running your car.
3. How much time are you willing or able to invest?
Is this a ten hour thing for you? A fifty hour thing? On average how many hours do you have to put into this?
4. Break it down to an hourly amount.
I know a lot of people push back on this. They'll tell you that thinking in terms of hourly is an employee mindset.
They're right and they're wrong.
It's true, we are not employees. We are not paid by the hour. And they've got a point that applies in a lot of businesses where there's a lot of development going on. You open your business, you do a lot of marketing. Or you start a blog and you have to put a lot of content out without getting paid in order to build the business to a point that it's making money. You can't really measure your work by the hour.
But the reality is, we are somewhere in between. We're in a task oriented business. As Kevin at Financial Panther points out, we're paid by the task rather than by the hour. So while the pay isn't based on our time, the pay is based on something finite. Those tasks take time, and there's a limit to the time you have available.
The biggest advantage to task based pay compared to hourly pay is that if you can perform more tasks in the same amount of time, you earn more.
But think about it: What's the most reasonable way to measure if that's happening?
Understanding your rate.
If your overall goal is to make a thousand dollars this month, and you have 40 hours to complete it, that's $25 per hour. When you break it down hourly, you can measure your progress as you go along.
5. A firm understanding of what you need helps you evaluate if this particular business model is the best fit for you.
There's a time when the reality may hit that this isn't going to meet your needs.
When you have a clear understanding of where you want or need to be, you have something to measure against.
And now you can ask the question: is it meeting those needs? Is it working? Can you make it work or is something going to fit your goals better?
This works beautifully for me right now. Two years from now, that might be a different story. That's because in two years, I want to devote more time to other things and not have to put the time into delivery.
But that's getting us into tomorrow's topic.