In order to manage your revenue, you must understand how it is generated, when, and how it flows in. Weather, it’s a monthly salary or random income. Do you have a consistent figure monthly or a random figure that depends on the jobs that you have done.
There is a guy who is surviving with income from a random peace job as a motor mechanic. He can work a vehicle and get paid $150 within 2 days, and his friend, who is also a mechanic, is working on permanent employment, earning $350.00 per month. These guys live a different lifestyle. The guy employed at a permanent job sent his children to a better school. Married and have a stable life.
On the other hand, the guy who does peace jobs sent his kids to a government school, and his life is not stable. WHY? the guy who does part-time jobs can get a random job and get $150.00 in 2 days, but after that, he can go for weeks without any better paying job or without any job at all. In this dry period, he will spend the whole $150 on his consumption.
He can’t commit on any monthly payment obligation because he doesn’t know exactly what to expect in any future days. He can get more or less or even nothing.
The guy working a permanent job knows what he gets monthly, and he can plan and project his program throughout the month or the year or even for 5 years because he knows his income. This is why permanent employed people seem more progressive than part-time people regardless of how much a part-time person can get at a given time.
In business, it’s also important to understand how you get your revenue. Those in farming, you know you need a complete season before you get any money from your harvest. Within the period from ploughing to harvest time, the farmer will be spending throughout and getting the returns after harvest and sold the yields.
The entrepreneur in construction will receive the payment after completing certain stages, the period in between the beginning of the construction to the point of finishing a certain stage in order to claim, the person will use money for the work to progress.
In retail business, the entrepreneur can receive money every minute as long as there are stocks. People will walk in and buy every minute, especially in grocery business. But the profit margin in these types of business is very small.
Those in mining can take years to establish shafts and doing exploration, but once they reach the level where the mineral is barried, their profit margin is very high.
In order to manage your revenue, you need to know the source and understand how you generate your income and the time that you need to receive your income. If you ignore this concept, you will always find yourself in debt, and your progress will be stagnant.
In my next post, I want us to discuss how a person can survive during the period when waiting for production to yield revenue.
If this is not well managed, by the time you receive your money, it will all go straight to service the debts that were created during the time of production. And it will seem as if you are wasting money or what you are doing doesn’t have profit.
Also Read: Financial Management.