Start with what the business must pay out each month, add the income you reasonably want to take, and add a buffer for goals and surprises. That total is the minimum the business needs to produce, before profit and growth.
Revenue is what comes in. What you need to earn is a different number. It is the amount required to keep the business running, pay the people who depend on it (including you), and make room for the goals you are working toward.
Why revenue alone can be misleading
A busy month can still leave an owner short if expenses, owner compensation and reserves were never built into the picture. Without a target, it is easy to feel busy without knowing whether the business is actually getting ahead.
A simple way to find your number
- List fixed monthly costs: facility, feed, insurance, software, subscriptions and loan payments.
- List variable costs that scale with work: supplies, labor, hauling, commissions.
- Decide on owner compensation: the pay you reasonably want to take from the business.
- Add a reserve for taxes, repairs and slower months.
- Add an amount for the goal you are working toward, whether growth, savings or debt reduction.
Turn the number into a plan
Once you know what the business needs to produce, you can work backward. How many lessons, boardings or services does that represent? Which revenue streams are predictable and which depend on filling open capacity?
Build your monthly target in five steps:
- Write down every fixed and variable monthly cost.
- Add your target owner pay.
- Add a tax and reserve buffer.
- Add a small amount for a current goal.
- Compare that total to your typical monthly revenue.