Unit F: Finance

Sales Revenue


The next step is to look at the projected sales revenue for the business. Depending on the business, revenue is earned from services, products, or a combination of both. The net income is equal to the revenue less the expenses.

net income = revenue – expenses

When the sales revenue is greater than expenses, the net income will be positive and the business makes a profit.

When the sales revenue is less than expenses, the net income will be negative and the business has a loss.

When the sales revenue equals the expenses, the net income is zero and the business breaks-even.

The ultimate financial goal of owning a business to maximize revenue and minimize expenses, which produces the highest possible profit.

Based on previous contracts with clients, Aaron has determined that his hourly rate will be $50.00. He estimates that he will be able to work at least 20 hours per week once his business opens.

  1. Determine Aaron's projected monthly sales revenue once he starts his business.
  2. Aaron's monthly expenses are $1 841.98. Determine the net income for Aaron's business.
  3. Aaron needs $2 500.00 per month to live on. Is he making enough income? If not, suggest ways he can either reduce his expenses or increase his revenue.


  1. Multiply Aaron's hourly rate by 20 hours to determine his weekly revenue. Then multiply his weekly revenue by 4 to estimate his monthly sales revenue.

    $50.00/hour × 20 hours/week = $1 000.00/week

    $1 000.00/week × 4 weeks/month = $4 000.00/month

    Aaron's projected monthly sales revenue is $4 000.00.


  2. net income=revenue-expenses=$4 000.00-$1 841.98=$2 158.02


    Aaron makes a monthly profit of $2 158.02.

  3. Aaron is not making enough income each month. His monthly expenses of $2 500.00 are more than his monthly income of $2 158.02. Reducing expenses is not an option since all the expenses are necessary to run the business. Aaron could try to find more work each week, which would increase his revenue. He could also find a part-time job until the business has a monthly revenue of at least $2 500.00. Aaron also needs to contact a tax specialist to determine how much money he should set aside for federal and provincial taxes.