As a small business owner, it’s only fair that you charge a modern price for a modern service. We can’t let a handful of people dictate what our prices should be and decimating our bottom lines. 10% is your fair share.
Joey Doughnuts works at Sal’s Automotive. Has for years. Joey got set up with a 401(k). There’s no company match, but he puts away about 6% of his $70,000 a year salary (let’s just make the math easy and assume he never gets a raise — poor kid). At the end of his long and successful career working at the shop, Joey has about $700,000 socked away for retirement.
Now let’s look at Sal himself. The entrepreneur. Turned his back on the corporate world to make a name for himself. Sweated out the first couple years — sometimes thinking he made a big mistake. Some weeks, he went without a paycheck, so he could afford to pay his people. The business had its bumpy start. With a lot of hard work, trust in his employees, and an honest work ethic, Sal’s Automotive turns a profit. Not much, but it’s consistent. From about $1.5 million dollars in sales, Sal’s turns 2% net profit. $30,000 a year. It’s not a lot, but the other shops Sal talks to seem to be the same. Matter of fact, he’s heard that’s about industry average. Sal is proud of his shop, and he should be.