Melissa Oldridge, has been a self-employed bridal and special events, hair and make-up artist for 12 years. As a sole trader, she finds it relatively easy to ensure she is making enough money to cover all her costs, pay her taxes and be left with enough money to live on.
Future changes ahead
Earlier this year, she and her husband found out that they were going to be having a baby. This got Melissa thinking about the future and how she was going to continue to earn an income and make it fit in with her imminent role as a mum.
Building on her fantastic reputation and contacts made over the years, she decided to start up her limited company. The company acts as an agency for bridal hair and make-up and has over 20 stylists who act as consultants for the business.
Brides choose the stylist they want to work with from the company website () and the company sorts out the logistics with the stylist. There is a pre-wedding trial to practice and perfect the look for the big day and of course, the big day itself.
Income is generated as an agency fee. The bride pays the company. The company deducts the agency fee and the stylist is paid the rest.
If only it was simple!
When trying to work out her costings for this new venture, Melissa struggled with using several daunting and complicated spreadsheets to try and work out her numbers. It was much easier when it was just her!
The power of the Revenue Target Calculator!
The most powerful tool on The Box is its Revenue Target Calculator (RTC). Using the tool proved to be instrumental in helping Melissa decide how much of an agency fee to deduct from the monies paid to the company.
Melissa found the simple, 5 step process to be easy to follow and make sense of. The tool starts with her entering how much she needs to take out of the business each month, then works out how much she needs to sell based on her costs.
As previously described, there are two income streams for her business. The income from the pre-wedding trial and from the actual day itself. The RTC allows you to put in as many income streams as your business has. There is an option to put in the sales and cost price or a mark-up percentage, depending on what suits your business.
The RTC allowed Melissa to create and save as many versions of the calculation until she felt confident that the revenue target was achievable. She created two versions. One showing an agency fee for both the pre-wedding trial and the wedding day and one where the company only takes a fee on the wedding day alone.
A massive eye-opener!
The difference in revenue target was incredible! If the company took an agency fee on both income streams, the target was £5,000 less per month than if it took a fee for just the wedding day.
Although the pre-wedding trial is 25% of the total cost to the bride, charging a fee on it reduces the revenue target by nearly 40%!