Find Your Production Ceiling: Student Example
So now I want to go ahead and just d'oh hotseat to find the production ceiling and if we could actually pull up our flip chart on who wants to volunteer to run some numbers we want to go is there anyone jump off here? I know I'm gonna make you tio I'm terrible at math that's how I know math so you you give me numbers and I'm gonna write them down let me get all right so let's start with how many hours a week you're spending on your business on revenue generating activities um so making plus marketing making plus month thing that's the thing once I design a card it's ok it's the packaging that takes time. So s o s so you're in your case we're going to count packaging as making okay because it has to get done for your product to get out the door. I know it's not fun and it is eventually something you can certainly hire out but in your case packaging is actually part of production. So even though you're getting someone else to print your cards, packaging is part of your production process...
. So we have to count that and are making a marketing time so what's your total time they're sixty five percent ok sammy hours so how many hours total on both of those um say thirty hours, okay well, I really can't right so thirty hours on r r g is and then what percentage is making versus marketing um I don't haven't yeah making is probably like ten hours okay so it's about ten hours I'm so glad that you just know you're so you're spending ten hours on production and in your case production is really packaging on then twenty on marketing right? Okay, so of your production time in your case what we're looking at since you're not making you're packing is how many product let's write a card to the thing you sells them sell the most of or you kind of somewhere in the middle it's a combo of okay of items and what is so when you're selling what is like your average if you're selling your retail store was the average dollars per sale is that it's not a single card usually it's somewhere in the middle right? Yeah what eyes say about twelve dollars ok so I'm just so that there for a minute so it's we have interfering in your ten hours of production time which in your case is packing how much product can you get through it? If you send ten hours packing all of your product, how many units is that exact? I know it's a lot, which is the way we're getting you up here because we want to calculate that um I did it recently come so and that didn't take ten out I think about thousand cards okay, I can do in turn out ok, so that means that if you were only selling cards so we're at four dollars facility for fifty eyes I know your numbers did you're right so if you were only selling cards your production ceiling would be about forty five hundred dollars a week retail so wholesale you're at half of that right there you have your selling producer you were holes number two twenty five so retail half of that which is that's a five case anyone's wondering ok, so that's your production sailing wholesale and retail but that's assuming that everything you're doing this card's not really some of that packaging is other stuff right? So I would say what's your kind of ratio of like cards to other things um if I mean it varies a lot I mean, I have stopped making products just because of packaging right is too long um but I have simplified that somewhat um I'd say maybe twenty five percent is is probably other stone guy so let's just say maybe that like if your average kind of retailers twelve let's say that between cards and other things you're probably maybe producing at something that's closer to e think how I want to do that like an eight dollars price point so you might actually be it like eight thousand retail that's a pretty good estimate maybe based on kind of where you're at four thousand wholesale so that's your weekly production ceiling this's advantage to volume is that you can get it produced and you can actually get a lot of product you have to turn it over so how many normal workweek hours or your normal work weeks in a year are you looking at um forty forty okay, so that means that at I stopped I gave up on doing math so forty times are four thousand dollars wholesales ceilings I know you do a lot of wholesale that means that your wholesale production ceiling right now at the capacity or at is one hundred sixty thousand dollars is your production ceiling and if you're selling it retail it's even higher than that that is good news for us because that's a number that is about about what you're trying to hit in revenue goals which is really great news because it means that right now your revenue potential is limited by your audience size in your marketing and not by the amount that you could make make sense all right good and having it and we can actually take the flip chart down that you want to do one more really quick all right one more really fast who wants to go karen's I mean you want to go if you could ask for another one it's gonna have to be you really fast all right, I'm sorry that's okay? So, um number of revenue generating hours a week uh I'm going to say forty ok and what percentage of that is making versus marketing right now is forty so we're going to change it right? So you're saying you're spending forty hours a week making and zero hours a week marketing unfortunate and are used to telling you know, wait your business problem one question I mean before it was like sixty hours making and maybe ten okay, so that's still hamster we all still have to go so let's put you at sweet spot okay? Okay, unless you unless you want to jump release where you should be, which is like eighty percent marketing twenty percent production let's go sweet spot okay, we're going to sweets so you're spending twenty on making and twenty on making thirty thirty because that I'm in the studio honestly like yes and no, I'm not gonna let you do that that's sixty hours plus you still have to do all that other admin stuff and here's the thing just because you are doesn't mean that I want you to have to be ok so we're going to do I'm gonna if you want to run the numbers later and just regard me I don't recommend that, but you can but I'm going to stop you assuming that forty hours on these two things is not a forty hour work week it's still like a sixty to seventy hour work week if we're being honest okay so how many products can you produce and I know you have a lot of different types of products but let's kind of focus on what you want to be selling how many products can you produce in twenty hours a week what do you produce? How long does it take you to make a piece an average piece um it takes me let's say it takes an hour to make a ring okay, so then in twenty hours a week you're making twenty products right? And then what is your average selling price for product one hundred dollars retail or wholesale retail okay, so are you doing a straight uh two times markup from also the resale I don't have any also and yes that's what I would do you gonna run these we're going to run that whole cell number for you anyway good because if you're not doing any marketing right now and you need a place to start ways here started wholesale okay so much easier to do have outreach okay, so twenty products a week so we're looking at two thousand dollars retail a thousand dollars also and how many workweek you so you said you were at fifty and I want that to be much lower wanted being forty ok? So I know I should do this in my head. But it's the end of a lot of classes. So your production ceiling is eighty thousand retail forty thousand wholesale. So that is the amount of product at this pace, and this price point. You can produce an ear, make sense, all right.