The following business transcript features Clay Clark, US Small Business Association Entrepreneur of the Year, discussing how to find a big niche for your business to help you achieve your big dreams on Thrive15.com, one of the top business schools in Michigan.
I'm going to help. Just reach out to me right now. Touch the screen; let me know. Here's the deal. $2 of profit per cupcake is what you'd make. 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 a year. We have to divide that by the number of cupcakes we have to sell after our break even point.
That would mean what? It means we have to do some math here, right? We're going to go ahead and say $100,000 divided by $2 means we would have to sell 50,000 cupcakes after the first 1,000 a 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 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. Let's do the math on that.
Hopefully I'm not losing you here, okay? Is it 62,000 cupcakes a year? Let's do the math here, guys. 62,000 cupcakes, some of you folks have gone to some college and you've done some math and you can figure this out, but here we go. I didn't graduate from college so 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 just able to somehow just ... " Oh, man, that's where it gets tough, like I say.
Roughly I'd have to sell ... Let's go to the calculator. We have a calculator? Let's do a calculator. I'm doing calculator because I feel like it's going to be a really dirty number here. How do we operate this phone? We have one of our camera guys that's doing the math here for us, but I'm going to go ahead and do it here. We have the one and the one and the nine. We have the zero. I think it might be like. Oh my gosh.
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See, I didn't have a degree, but I almost got it done here, so right here. We have 1,192 cupcakes a week. Now, how many per day? Somebody with calculator help me out here. We divide that by 6. You can do it by 5. If we divide that by 5 because we're only working days a week because we're like, "Uh uh, I'm only working 5 days a week."
Caleb Taylor: Preach. 238.
Clay Clark: Okay, 238. You have to sell 238 cupcakes a day. We're open for business 10 hours a 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: 22.8. I met a person far off on the east coast who had this idea to build this big cupcake business. I broke this number down to her and I showed her. It's 23.8 cupcakes per hour you would have to sell to achieve your goals. She said, "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? That's a stupid idea then. She was like, "The most we ever could sell in a day was 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. He's trying to blow up the whole Death Star thing. They're like, "Luke, pull up." I'm telling you here. 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 got 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.