How Much Should You Make Each Month?

How much do you need to make each month? While it’s going to vary from person to person, you should know how much you need every single month in order to be able to continue in the lifestyle that you have made for yourself.  You need to know what you’ll need to continue paying yourself, your bills, your overhead, your contractors and your employees.

Over the years that I’ve been mentoring, coaching, and consulting with appraiser business owners across the country, I’ve found that very few small business owners know what their finances are. I know it sounds crazy but it’s something that I see on a regular basis and it is more common than you would think.

I’m sure that’s not you. It’s none of you reading, it’s your neighbor, it’s your colleague, it’s your peer, but there’s a lot of appraisers that don’t know what their finances are. They don’t know what their hourly pay is either, they also don’t know what it takes to run a business and they don’t even sit down and crunch the numbers.

I’m only a numbers person because I’m forced to be one.  For the first twelve years of my business I only knew what my financials were on a high level, I didn’t look too closely at the details. I didn’t know how to look at a balance sheet and I didn’t know how to read a profit/loss statement.

As a small business owner, it’s nobody else’s job to know the financials of the company.  You don’t have a CFO, you are the CFO, CEO, the President and everybody else in one. You’ve got to know where your finances are.

I’ve found it very helpful to know what my “monthly nut” is.  This is the amount that I need to achieve in order to make things work.  I might not reach the goal every once and a while, but, in general, I have a level that I need to be at to meet my goal.  This is the financial push I want to meet so that all my bills, my contractors, and my employees have been paid. I can cover my taxes, take home a salary and put a little away for savings. What is your monthly nut? How does that translate into orders you need each month?

The appraisal business is a service business. In general, you should allocate about 20% for operating expenses like your gas, software, hardware, membership fees, and so on. If you have employees or contractors, they should take up about 50% and, as the owner, your salary should be around 20%. The 10% that is left should go into a savings and slush fund to carry you through if you have a slow month.

These are a few financial benchmarks for you to consider.  Most importantly, you should know what your monthly nut is.  What is it for you? Where do you need to be? Do you know what that number is?

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 448

6 Comments on “How Much Should You Make Each Month?”

  1. Pingback: How Much Should You Make Each Month? - Appraisal Buzz

  2. So your telling me your cut is only 20 to 30% of your gross receipts instead of say 80 to 90% if you have a “run it in the family business”. Put another way, to have an equal net cut “your business model”, it would seem you have to increase your volume / liability 3 to 4 times just to be even if you did it small scale (yourself/family).

    Considering your profit benefits would be limited with this model to a point (high costs), I now understand your need to churn and burn 4 to 9 appraisals a day, and your love affair with needing AMC work (we know, only the good ones).

    Seek the truth.

    1. Your comment is right on and you nailed it. Big commercial companies force their minions to do 7 to 9 valuations a month, when I can do 3 to 4 max in a localized area. To have workers one must become a factory mill assembly line business

  3. Bill, when you are a one person shop, you do all of the work and you lose another very precious commodity….time. You do not have a business to sell. When you want to retire, or if you pass before your time, your family has nothing to sell. You don’t sacrifice quality to run a business. Personally, I think you should do what makes you happy.

  4. Wow, margins are good. Including medical insurance, bonuses, and other employee benefits, my employee compensation is about 70% of gross. We net about 15% after owner salary with twelve people in my appraisal company including two virtual assistants.

  5. Thanks Dustin, good article. I have a small business in semi retirement but have my eye on overhead (hybrid Camry, 40 mpg, home office, etc). My overhead is about 20% of gross and I keep the other 80%. I cherry pick assignments and average $550 to $650 per residential assignment. The net supplements the retirement income and I have plenty of time for golf and travel. I think part time, productive work is healthy for a longer life and greater financial security for family. Bulldog

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