Revenue vs take home pay: the contract I refused.
Revenue vs take home pay can look wildly different once wages and rent come out. In 2023, Diego was offered four hundred and thirty-two thousand dollars over two years. After payroll and overhead, he would have taken home around seven thousand dollars a month.
The offer in Mexico City.
In October 2023, a regional logistics software company offered Diego a two-year transformation contract. It paid eighteen thousand dollars a month, guaranteed, for twenty-four months. However, the founder attached one condition and did not soften it. Diego had to hire four full-time strategists and open an office in the city. Otherwise, the contract would go to a firm in Miami.
Revenue vs take home pay on paper.
He had two weeks to answer and spent seven days building the model. That meant local incorporation, payroll taxes, a lease and hiring. It also meant guaranteeing four salaries monthly, whether or not the client paid on time. By day eight, the arithmetic surprised him. The top line was enormous, while the line reaching his bank account was ordinary.
Everything in between was other people's wages, rent and the machinery behind them. So check revenue vs take home pay for your own year-two figure, not just the top line.
What saying no actually cost.
He turned it down on the Tuesday, unwilling to manage a payroll instead of solving problems. He gave up two hundred and sixty-four thousand dollars of revenue across twenty-four months. Yet in his own pocket, the difference came to close to nothing. Instead, the real price was a tier of corporate clients that avoid one-person companies. That door is shut, and his business is deliberately smaller.
Also, he knew the price on paper before he picked up the phone. That is the lesson here, rather than the decision itself.
Work out your own revenue vs take home pay.
Write your year-two revenue figure, then subtract wages, rent and overhead to find your pay.
Note which doors staying small would close, so you see the price before you pay it.
From the book.
I want you to sit inside that number for a second, because you may be about to build something with the same shape. The top line was enormous. The line that reaches your own bank account was ordinary. Everything in between was other people's wages, and rent, and the machinery required to produce other people's wages and rent. If you have a revenue figure in your head for year two of your business, do you know what the second number is? Have you ever worked it out, or have you only ever worked out the first one?
I Want to Start a Business but I Can't Quit My Job, chapter 4: What you are actually buying
Questions about revenue vs take home pay.
Why can revenue vs take home pay differ so much?
Because most of the top line goes on other people's wages, rent and overhead. On the contract Diego was offered, he would have kept around seven thousand a month.
What did Diego really give up by refusing the contract?
Not money, since his own pay would have been roughly the same. Instead, he lost a tier of corporate clients who will not deal with one-person companies.
Does he regret turning the contract down?
Most days he would do it again without hesitating. But when a client leaves or something breaks at midnight, he feels the loss properly.
Read the whole chapter.
This lesson covers one section of chapter 4, “What you are actually buying”. The book goes further, with the full evidence, the stories and every exercise.
Lessons in this chapter.
- 01 Reasons for starting a business: what you really buy.
- 02 Self employed working hours: the six-hour price.
- 03 Self employed job satisfaction: why it is real.
- 04 Flexible work arrangements: price what you want.
- 05 Lifestyle business: small on purpose, not by accident.
- 06 Quitting job to open a cafe: count before you leap.
- 07 Revenue vs take home pay: the contract I refused.