Daily Archives: October 18, 2008

$250K Gross

That’s the number given by Maria Cardona of the Obama campaign when asked by Julie Banderas if the $250K was net or gross.

That makes it even worse.

Maria Cardona continues to insist that 98% of small businesses make less than this. But she’s talking gross numbers here. Does she or the Obama campaign realise how many small businesses can GROSS a quarter million dollars a year? Easily?

There’s a HUGE difference between a company grossing $250K and netting $250K…

Say you have a small retail establishment.

You may have rent of  $2,250/month (1,500 sq ft @ $1.50/sq ft) = $27,000

You may have a couple of employees. Maybe at $12/hour. That’s $48,000 just for regular time, 40 hours a week, 50 weeks a year. Then add in $4,131 for the employer’s portion of FICA (social security and medicare), add in unemployment taxes and any benefits you might be paying. That $48,000 in salary can become $62,000 when all is said and done.

So far, with just rent and two employees we are up to $89,000.

Then we have insurance, advertising, shipping, inventory, licenses and other business fees, local taxes, inventory losses, perhaps franchise fees (depending on the business), and a myriad of other expenses. And you want to pay yourself something. You also want to be able to reinvest something into the business.

With good sales, or a service that’s in demand; business to business or business to consumer or both, I would say the number of small businesses that can gross $250K or more in any year is far in excess of only 2% of small businesses.

mm-5