Too often do we do things thinking that we are making money when we really are not or it has very little pay out. For any situation, think about the estimated final payout subtracting all the costs to make the payout. In addition, how much time did it cost you to earn the payout? With these considered as a starting point, you will be able to optimize your time usage for maximum profit.
How’s it going everybody this is beat the bush today i’m gonna talk about how to turn a profit and when you should call it quits if you really think about it every person has a handful of opportunities they can pursue certain ones are more profitable than others sometimes some of them may not pay off initially but maybe they may grow in revenue now today i want to
Go over a very simple formula that a lot of people just overlook they do not look at how much profit they’re actually making from a certain endeavor this all comes down to how much you’re selling each good or service for and then you have to subtract out how much you paid for the good maybe you have advertisement that you paid for it maybe you have to pay rent for
A certain spot maybe you’re selling good so you have to pay shipping for it or maybe you’re using a certain platform like ebay so you have to pay a certain fee in order to sell on that platform now when you subtract out all these different fees everybody’s taking a little cut here and there then you get your final profit for that particular item now sometimes you
Might hit an economy of scale so if you sell a lot of items let’s say ten thousand of them and if you rent a place for ten thousand dollars and you can say okay every single item that you sold cost you $1 of rent in order to sell that item now i want to share an example here both in terms of as an investor and based on what i observed on other people that started
Businesses i had a friend that started a business and they poured more than a hundred thousand dollars into learning a restaurant business now this person opened up a restaurant in a not-so-good neighborhood this person has never opened up a restaurant before so this pose a significant risk for the person that is out laying all this cash in order to start this
Business i wasn’t actually asked to invest in the business but if i were an investor in this business i would look at it and then go well this person does not have much experience are they going to spend this money and i’ll never see any of it back will they make enough money every single month in order to recuperate the cost that they put in so they put in more
Than a hundred thousand dollars into renovating this place and let’s say your business chugs along and it does okay maybe it breaks even so then it’s able to pay its own rent but you have to make more than your costs in order to recuperate what you put in so sometimes you would see a business maybe it might struggle for years and basically not turn a profit at
All it’s just breaking even then you might wonder why you’re spending all this time on this business when you’re not increasing your profit and essentially you’re in the red for many years in a row now i’d like to go over a different example where i did an experiment with selling very low-cost goods in the end even if you do make a profit you want to look at how
Much time you actually spent in order to make this profit so at some point i was able to buy some goods for roughly $1 each and i’m able to sell them for about five dollars each on ebay to make the numbers simple i’ve rounded everything of course but if i sell it for $5 – one dollar of ebay fee – two dollars of shipping fees – one dollar for purchasing the product
Itself in the end i’m only left with $1 and let’s say it takes me about 15 minutes time to package the thing up to actually ship it and everything then when you really think about it you’re only making $4 an hour so when i really stop to think about it i was like you know even the first time around when i made roughly $1 i’m like you know this is not really worth
My time to go buy that item and you know listed and then resell it so suffice to say that was an experiment that didn’t last very long and this is certainly something that i think people should look into especially when your profit after selling that item you really need to compare how much time you spent into it and how much your time is worth now on to how much
Your time is worth this is different for everybody i always like to talk about how much your time is worth outside of your normal day job so for example let’s say you have a salary job a lot of people have a salary job let’s say you make an equivalent of about $20 per hour at this salary job so some people might go it’s not worth my time to save $20 because i earned
$20 and my work i think this is the wrong way to think about it because you should really think about it in terms of how much more money you can get per additional hour that you work on top of whatever you’re already doing so if you’re a freelancer yes you can possibly make $20 more every single hour that you put in so let’s say you want to go really crazy next
Week and work 80 hours well will you be able to double the amount of pay that you get if you can and if you can work as many hours as you want and make that much more money then yes you can use that argument however a lot of people who are on salary jobs if you work 40 hour 50 hour 60 hours you may not make that much or some people might say if you work 50 or 60
Hours at your job or maybe 80 hours even you might be able to put in so much effort that you might get a pay raise and this will in turn compensate for the extra time that you put in in my experience too extra time you put in is not guaranteed of course you might hit it big and you might get a generous employer that will actually give you a big enough bonus to have
It worth your time most of time your bonus is not going to be directly proportional to the amount of time that you put in now on the other hand if you’re a kid you cannot get a job yet and essentially your hourly wage is zero because you cannot really earn anything at all then yes go ahead and sell those ebay things earn a $1 profit because $1 is still one dollar
Because it’s more than what you would normally make anyway if you’re at a salary job and you do not have the ability to make whatever amount per hour that you make for each additional hour outside of your normal job then i argue that your extra time is essentially worth zero therefore if you do this crazy ebay thing and earn $1 extra it’s still $1 extra on top of
Your salary now there’s yet another layer to this because you might value your leisurely time maybe $100 an hour so you will not give up this one hour even if you can use the same one hour and make $100 so really think about how much you’re leisurely timeless works i know myself i need a certain amount of leisurely time and if i have something where i have to work
A hundred hours i would flatly refuse to do that so this really depends on the person how much is leisurely time you have let’s say you use your 40 hours a week to go to work and you already satisfy that requirement and then you have your leisurely time that you’re comfortable spending and yet on top of this let’s say you have another 10 hours you know just outside
Of your leisurely time you just want to do more work then yeah you can use this to earn $1 an hour even i don’t care hopefully you can earn more than that because you can pick and choose what kind of profit that you get you can go okay you know that it only earns me $1 an hour let me try this other thing that earns me $5 an hour or $10 an hour equivalent so therein
Lies the philosophy of earning a profit and i employ this all the time whenever you look at something how much time you’re spending on something you want to look at how much you value your time how much time you want to spend in it how much money that you will get doing something else maybe it makes more doing something else so thanks for watching this video on
How you can turn a profit and when you should call it quits don’t forget to give me a like on this video comment down below let me know if you agree or disagree with this philosophy if you’re interested in supporting the channel check out my audible link down in the video description below where you can get a free audio book if you don’t like this audiobook or the
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Transcribed from video
How to Turn a Profit and When to Call it Quits By BeatTheBush
