The following features a transcript of Clay Clark, the former US Small Business Administration Entrepreneur of the Year, talking about "Startups By The Numbers" on Thrive15.com. Thrive15.com is one of the best business schools in Florida!
Clay Clark: I'm going to help you now.
Caleb Taylor: Come on, bring it on.
Clay Clark: Reach out to me right now. Touch the screen. Let me know.
Here's the deal. 2 dollars of profit per cupcake is what you'd make. Let's just say your goal, let's say we go back to our goals, remember our goals? Hopefully, we didn't forget our goals. If our goal was to go see our mom who lives in Michigan and to work out every week at this gym and to feed our kids and to learn a new skill. Let's say our goal was to make 100,000 dollars a year and we have to divide that by the number of cupcakes we have to sell after our break even point, that would mean what?
Well, it means we have to do some math here right? We're going to go ahead and say 100,000 dollars divided by 2 dollars means we would have to see 50,000 cupcakes after the first 1,000 per month to break even. We would have to sell 62,000 cupcakes. Again, we know that it takes at least 1,000 cupcakes a month just to break even. That means it takes 50,000 cupcakes at 2 dollars profit per to hit our goals. We're going to have to sell 62,000 cupcakes a year, a year, just to make 100,000 dollars.
Let's do the math on that. Okay. Hopefully I'm not losing you here. Is it 62,000 cupcakes a year. Let's do the math here you guys. 62,000 cupcakes. Some of you, some of y'all folks have gone to some college and you've done some math and you can figure this out. Here we go.
I didn't graduate from college. If I can figure this out, I want you to clap for me while you're watching. You're just like, "man, this guy. I don't know how he does it without that degree. He's able to somehow just, oh, man." That's where it gets tough. Roughly, I would have to sell, well, let's go to the calculator. Let's do a calculator. I'm going a calculator because I feel like it's going to be a really dirty number here. It's going to be like a huge, how do we operate this phone? We have one of our camera guys doing the math here for us. I'm going to go ahead and do it here. We have the 1, the 1, and the 9, we have the 0, I mean, right here I think. I think it might be like ... Oh my gosh. Oh, man. See, I didn't have a degree but I almost got it done here. Right here.
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We have 1,192 cupcakes a week. How many per day? Somebody with a calculator, help me out here. We divide that by 6, no because we're opened, no, we do it by 5. We divide that by 5 because we're only working 5 days a week because we're like, "uh-uh, I'm only working 5 days a week."
Caleb Taylor: Preach. You need 238.
Clay Clark: Okay. 238. You have to sell 238 cupcakes a day. Now we're open for business 10 hours per day. How many per hour? 23.8. Now you have to ask yourself, this is where the number gets real. Can you sell 23.8 cupcakes per hour? Am I helping somebody?
Caleb Taylor: Oh yeah.
Clay Clark: 23.8. I met a person far off on the East coast who had this idea to build this big cupcake business. When I broke this number down for her and I showed her, hey, it's 23.8 cupcakes per hour you would have to sell to achieve your goals. She said, "well, we don't even have the capacity to make that much per hour, let alone sell them." Bam. Get out of that business. All right. I mean, that's a stupid idea then. She is like, "the most that we could ever sell in a day is maybe 25 a day." Get out of there. What are you doing?
You remember Star Wars where Luke, he's going into the trench in the Death Star and he's trying to blow up the whole Death Star thing and you're like, "Luke, pull up." I'm telling you here like, "avoid the Imperial ships here man, pull up. What are you doing? Get out of there." They're blasting at you. You're not going to make it. You have to get out of there. If you can't sell 23.8, get out of there. I don't care what business you've decided on. If you don't know this answer, you must stop. You must not move forward.