Judging by the response she got from other young entrepreneurs when she wore her painted SportsTees to school, Sue Hansen figured (conservatively) that she could sell at least 200 SportsTees during the school year. That’s about 20 shirts per month to be sold to her classmates and the spectators at her school's athletic events.
Once young entrepreneurs decide how much they can sell each month (or in any other period) they can then calculate their revenues or how much cash they will be collecting from customers. Sue calculated her monthly revenue for her SportsTees by simply multiplying her monthly sales by price of each item. Her potential revenue was $10 x 20 = $200 every month. However, Sue had to consider the following factors:
- The revenue is based on the assumption that all of the estimated 200 potential customers will actually become real paying customers. Unfortunately, sometimes people may show interest in a product or service but then, when push comes to shove, they don’t pry their wallets open to make any purchases. young entrepreneurs have to be careful not to overestimate the number of customers they can actually get.
- Expenses still have to be subtracted from the revenue to calculate real profit.
- It takes a lot of work to make this money. Customers will also want satisfaction and they may demand their money back if they don’t like the shirts.
- The time she had on her hands was limited. With school taking up most of her time during the week, she may not be able to take on all of the business by herself. It may just be physically impossible to actually meet the demands of her business.
