Minimum Viable Income
Minimum Viable Income
In this post, we will we talking about minimum viable income and everything that you should know to be able to afford to chase your dreams.
Starting your own business is for many people ultimate freedom. You get to set your own hours, all your work you do for you and your business and when you do things right there are unlimited opportunities. However, it is not all sunshine and butterflies. Contrary of traditional employment, entrepreneurship does not guarantee income.
Now, personally I am very enthusiastic about the online business model and I truly believe that you can create a full-time income with it. As much as we sometimes wish to dive in and focus on our passion, it is important to know what the numbers are that we are working towards. It would be disappointing if you would have to beg to get your old job back.
The good news is that often this number is a lot lower than you might think, to make it even better I have developed an easy to use tool that gives you some quick information about your numbers. So let’s get started!
Minimum Viable Income – An Introduction
The key to knowing your magical number that you need to make to keep your life afloat is called minimum viable income. Minimum viable income means the least amount of money your business or side project would need to make in order to support yourself and those that depend on you.
Now minimum viable income could greatly vary per person. A student that lives with its parents needs less income to maintain their lifestyle than a single parent with two children. That is understandable and perfectly okay, it is important that you objectively look at your personal situation.
A keyword here is minimum, which means the most basic form of lifestyle that you and those around you can afford to live. Now I would, for example, wish to be driving a Ferrari now while starting my business, but that would not really qualify as a minimum requirement.
Often our fears, fears we won’t be able to live, fears we won’t be able to support those around us or fears we simply won’t have enough to eat, are holding us back.
Money should not be an argument to not get started and if you actually put a number on your fears you will find that the number is much lower and easier to work with. Yes, you probably will have to cut some corners here and there, but that is a small price to pay (or not) to chase your dreams.
Calculating your Minimum Viable Income
In order to calculate your minimum viable income, there are a couple of steps that you should take. Below we will discuss all the required steps.
Determine Fixed Costs
Your fixed costs are all the expenditures that you have to pay each month, this is always a fixed amount. Examples include mortgage/rent, insurances, tuition fees, loan payments and bills such as electricity, cell phone, internet and cable.
Take some time and write down all your fixed monthly expenses, you can fill them in directly in the Excel file that I shared above. You can also use your own Excel sheet or you can even write it down on a piece of paper.
Determine Variable Costs
Variable costs are all the expenses that are not fixed but that you are required to pay for, your groceries are a good example. You can also approach your variable costs by setting budgets or maximum amounts that you can spend on certain categories.
Run the calculations
Now that you have written down all your numbers it is time to check the final calculations. If you used the sheet I prepared this will be done automatically, otherwise you might need to add some quick formulas. Your total expenses number is the number you will be working towards.
Check your number, is this more or less than you expected? How much money do you have left in your current situation and do you see any potential areas where you could save money? These are important questions to ask yourself now.
Tighten your belt, how far are you willing to go?
Changes are that the number that you have calculated is not the minimum number, more likely this is the number of your current lifestyle. In an ideal world, this number would suffice, you start your business, you make ends meet and that marks the start of a successful entrepreneurship story. However, changes are that in the real world things might go differently.
Minimum viable income is all about finding your absolute minimum, what is the lowest number you could work with. This is all a matter of how far you are willing to go, some entrepreneurs move back in with their parents, some stay with friends and some even live out their car. I am not saying that you should, but you should figure out what is in your situation, the absolute minimum you require.
Making ends meet is easier than you think!
Now say that you have calculated your numbers, you have objectively assessed your financials and determined that your absolute minimum totals to £2,000 per month. Next step is to determine how many of whatever it is you are selling you need to sell to make your number, it is easier than you think.
Say you sell eBooks and the profit you make per book is £15, that means you need to sell 134 books per month to make your number, which is approximately 4,5 book per day. That is not impossible if you have taken the time to organise your business in the right way.
Say you sell courses and the profit per course is £200, not taken into account the time you spend to create this course. To make your magical number you would have to sell 10 courses per month, again not impossible.
If you know your magical number, your absolute minimum viable income, you can start calculating how many sales or referrals (if you are into affiliate marketing) to make your number. Often it is much easier than you imagined. If you do not put a number on it, you do not know, after you set the number and the target, all you can do is make it work!
What if you are not making your number?
Entrepreneurship comes with many uncertainties and it is likely that it takes time before your business starts generating the money you envisioned. Below I will share some tips and tricks that you can implement if you are not yet making your minimum viable income and how you can be independent faster.
#1 Save up your runway
A popular term in entrepreneurship is runway, in other words, how long of a runway can you afford with your savings. Say your minimum viable income is £2000 and you have £ 10,000 in savings, that would mean that your runway is five months.
Saving up enough money before you start your entrepreneurial life is not a guarantee of success but it certainly helps you to focus on your business.
#2 Supportive spouse or partner
Does your spouse or partner has a steady income and does he/she support you in chasing your dreams, a supportive spouse can add that extra financial security that you might need to build a business. It is important to go into this with mutual understanding.
#3 A regular job
There is nothing wrong with having a regular job aside from starting your own business. Having a job would provide you with the financial security and puts less stress on making things work as soon as possible with your business.
#4 Part-time work
Working part-time frees up more time in your schedule and gives you financial security. If you do not want to work full-time because setting up your business is too time intensive, working part-time might be more suitable for you. Having a steady side stream of income takes off some of the pressure to make money as quickly as possible with your online business.
#5 Go freelance
Working freelance provides you with the opportunity to already work in the field of your business. Are you setting up an online design agency, it is great to start building a portfolio by doing freelance work. It helps you to create an additional income, polish and build on your skills while also building your personal business.
Managing your financials and knowing your minimum viable income is a vital step when it comes to building a successful business. Using this simple exercise you will gain the required insights of the numbers that you need to make to be able to live off your online business.
How did you start your business and how did you figure out your minimum viable income, let me know in the comments below! For now all the best and stay awesome!
Sell Your Crap
Crafty Studios is promoted throughout Birmingham both online and offline, we can promote your group to tens of thousands of households every month, as a safe Facebook Buy, Sell or Swap group.
Other locations where you could sell your Crap...
How To Make Money Selling Your Crap
The truth is, you may be sitting on a pile of cash you just never realised, and that cash can be better spent on resolving your debt problems.
You also get the bonus of a more organised home. The only real skill involved in turning your trash to cash is making a concerted effort to get started.
Start Right Now
To make the processes relatively easy to start, set an empty box in most rooms of your home. When you come across an item you no longer have a need for, toss it in the box. This will prevent you from delaying the process because you are short on time during the work week and over the weekends. When the boxes start to fill up, take time to sort through the belongings and decide where to go to turn it into cash while you chill out in front of the TV or listen to your favourite music.
There are quite a few options for your items to be sold or traded. Between the Internet and local connections, you should test out several items to find what works best for you.
Here are a few choices to get you started:
Pawn Shops – This is a great choice for items that have value and are still in good condition. Jewellery and quality clothing can be turned into cash through pawn shops instantly.
Craigslist/eBay – These websites are a good choice for items that hold value as collectibles or hard to find items. Beware of the dangers of meeting with people in person through Craigslist postings (go with a friend and if you get a weird vibe throughout any of the interactions then be sure to trust your gut), and consider the sometimes substantial costs for mailing eBay items.
Garage/Yard Sales – Like Car-boot sales, only this time in your own front yard. If you have the space and the time, you can set up your own sale at home. Offload your items for a considerable discount to get rid of the clutter. You may not make a ton of cash with such drastic discounts but it can certainly be a fun way to earn some money to get that debt paid off or to put some additional funds into savings. Get friends and neighbours involved in the event planning and make a weekend of it.
Thrift Stores – After the yard sale is done and you still have a few boxes of stuff leftover, now is a good time to visit the local thrift store or Salvation Army. You can donate your belongings including clothes and housewares for others in need. Get a receipt of an estimated donation amount to be used for a tax deduction at the end of the year.
Swaps/Barters – There may be local places or online portals where you can trade your items in for something else that may be of use to you.
This is not meant to give you a license to gather more junk but meant to help you remain frugal by getting things you actually need without spending any money. Swaps are fun to do with books, baby gear, craft supplies, accessories you name it! Swaps are a really fun way to get new-to-you items without spending a dime.
What is the living wage as an annual salary
We don’t publish the Living Wage as an annual salary as the requirement is that the Living Wage is paid for each hour worked.
You can work out the annual salary by calculating Living Wage x hours worked per week x 52.
For example the UK Living Wage as an annual salary might be £8.25 x 38 x 52 = £16,302 and the London Living Wage as an annual salary might be £9.40 x 38 x 52 = £18,570.40
Where a salary calculation is used the Living Wage must also be paid for each hour of overtime worked.
The ancient Egyptians had a beautiful belief about death. When their souls got to the entrance to heaven the gods asked them two questions. Their answers determined whether they were admitted or not. The first question is, have you found joy in your life? If the answer is yes, the following question will be has your life brought joy to others? Accumulating wealth without bring joy to other people’s life means nothing, we come to this world empty handed and we shall leave empty handed too.
Here is my promise to you...
My name is Paul Cardall, and I'm going to share with you two ways to create great wealth. The first is how to save money, and the second is how to create money.
Lessons Everyone Should Learn About Money & Wealth Creation
You must know how to handle the biggest of all drugs – money. Yes, it is a drug, the lack of it or its overdose can cause serious financial and emotional damage. The only way to properly handle the powerful drug of money and not get addicted is by acquiring sound financial knowledge – the understanding of how money functions.
Money is unfair, so learn its rules in order to use them to your advantage. If you respect money and play the game of money by knowing the rules, you will see a world of abundant money and will make money work for you.
Don’t be afraid of money. Instead face it with courage. In the end, it’s not equities, bonds, commodities, or real estate which will help you achieve financial freedom. It’s your knowledge about money which will make you rich and help you always stay wealthy and financially free.
One of the important rules of money is to spend money to get rich. The truly wealthy people know when to handsomely spend on what and when to cut down. By not spending on the right thing at the right time, you might be permanently closing the doors of your house to money.
Don’t work for money; rather, let money work for you. Nobody can become really rich and stay wealthy by working for money. If you keep working for money, you would just be doing that throughout your life.
Be in control of your money. If you are not in full control of your money while dealing with it – be it in earning, saving, protecting, budgeting, investing, insuring, etc. – then it will control you and you will never be able to achieve financial independence.
Invest time before you invest money. Don’t just aim at being rich without any knowledge or experience about money. Learn how money has been made and lost in this world before you commit your own money.
Don’t run after money; instead, be a financial magnet which attracts money and ensures that it always sticks around with you.
Never be a slave to money; be the master of your money. And once you become the master of your money, you will automatically start walking on the path of financial independence.
If money is your problem, money cannot be the solution; simply because the problem itself can’t be its solution. Further, the problem of money is not only its scarcity – even its excess can be a problem.