The Business Goals screen is a tool you can use to calculate how much cash you need to spend on inventory in order to make a desired after-tax take home pay.
You have a lot you can manipulate here, but don't be overwhelmed. Just change one field at a time and you will get a sense on how everything is connected.
Let's break it down based on the three sections. If you make a bunch of changes, you can always click the Reset button to set everything back to the defaults.
Changing Owner Expenses:
- Monthly Expenses. Enter your total monthly household budget. This is how much cash you want after taxes. Add in all your mortgage/rent, bills, savings, everything in there.
- Annual Expenses. There are two fields here, the field on the left is the total amounts that come up maybe once a year (a family trip, a large purchase you want to make, investment, property taxes, etc.). The right hand figure is calculated for you, and is the monthly amount that annual expense works out to. That tells you how much you need to put aside, after tax, to make those purchases. (Note, you will need to click the Calculate button at the bottom after you modify this edit field.)
- Net Income After Tax. This is the total of the monthly expenses plus the monthly portion of the annual expenses. This is also calculated for you. This is how much money you need so you can live your best life.
- Owner's Tax Rate. Use the slider to select the overall personal tax rate you expect you would have to pay. This is not intended for tax filing purposes, of course, it's a tool for informational purposes only and you should always talk with a tax professional on any matter relating to your personal tax situation. When you slide the bar from left to right, you the calculated personal income tax amount will update on the right.
- Gross Monthly Income Before Tax. This is the calculated amount that combines the Net Income After Tax amount plus the estimated Owner's Tax Rate estimate. This is the total money you need your business to make every month. This is your main financial goal.
- Gross Annual Income Before Tax. This figure is a calculation of the Gross Monthly Income Before Tax amount multiplied out by 12 months so you can see how much revenue per year your business needs to make so you can buy everything.
Changing Estimated Sales:
These sliders are the individual input costs for your business. Slide the different sliders left to right to change the percentage amount to see how that impacts your bottom line. Think of it like this: if you sold something for $100. What is the approximate breakdown for each of the following cost components.
- Product and Prep Costs. Select the percentage representing the amount you paid for the actual product. Include in that amount the amount you spend on prep costs with a prep company or yourself (ie. boxes, labels, poly bags, etc). Also include FBA Inbound Shipping fees.
- Amazon Selling Fees. Select the percentage representing the Amazon Pick & Pack, Referral, Storage, and Long-Term Storage fees.
- Product PPC ACoS. Select the percentage representing the amount of money spent on PPC Ads as represented by the dollar spend divided by sales generated. You could use the ACoS from your Amazon ad spend from the marketing dashboard.
- Customer Return Rate. Select the percentage of your total sales figures that come back as customer returns. For the intention here, that should be based on money not units.
- Gross, Top-Line Sales Target. This is the total amount of top-line sales you need to sell every month in order to generate the revenue to produce your Gross Annual Income Before Tax.
Changing Investment Needed:
In reality, you aren't likely to sell 100% of your goods every single month.
Move the 30 Day Sell-Thru Rate slider left or right to match the percentage of units you would sell out in 30 days if you bought 100. It's just an average, a gauge but a very important one.
What this means is that if you select 75%, you are saying that only 3/4s of your stock will sell out in 30 days. This calculator basically pretends the other 25% never sells (maybe long-tail items that may take several months, or Amazon hogs the buy box, or many other reasons).
The Investment Required is a calculation of how much cash you need to spend every month in order to make the Gross, Top-Line Sales Target you need in order to produce the Gross Annual Income Before Tax so that you can live the lifestyle you want.