I see it relative in the context of student debt as it allows us to understand HOW that money is made in the first place. What I am seeing as a complaint throughout this thread that companies are simply not paying students well enough, I’m trying to get to the bottom of where that angst comes from.
Let’s assume I’m reading the numbers correctly, and Cash is implying that they made $165K from $750K revenue that equates to 22%. They have not answered, so I am going to make that assumption for now.
The business that Cash is/was working for paid 22% of revenue in return for Cash’s work. Not knowing what company Cash work(s/ed) for, I have no clue on the overhead this company is carrying or even what kind of company it is. If it is a product company a huge portion of that $750K revenue has to go back into purchasing inventory towards future sales. Let’s give that a round number of 40% ($300K).
We’re now up to 62% ($465K) of that revenue taken up. Marketing in a product company typically anywhere between 0%-20%. Let’s call it 10% to split the middle.
We’re now up to 72% ($540K) of revenue taken up. The computers Cash had to work on, licenses for CAD, Adobe, Keyshot…again I have no clue what they were working on…but those had to be amortized into this equation. The working capital for the product needed to be purchased. Injection molded tooling isn’t cheap. Again, no clue what kind of product we’re talking about that Cash worked on. I’m going to give this discussion 15%…which I believe is on the low side. But it works for now.
We’re now up to 87% ($652K). We’re at less than $98K “left over”. Were there other employees? That’s more taken out.
Was this over more than 1 year (my assumption is yes considering $165K/year would be a pretty darn good salary)?
Either way, the business owner is “left” with $98,000 in the above scenario. A percentage of that needs to be saved for a rainy day. The “rest” of it goes to the business owner’s salarly (maybe?). Are there partners? Who else is taking a cut? Investors?
The numbers above move about if this is a consulting/service company. But the fundamental story is the same.
And here’s my take on the heavy debt…
The heavy debt likely is NOT worth it in today’s society if your plan is to be an employee for the 50 years after graduation. You COULD move up the ladder in a corporate setting, or be the high flier at a large consultancy and take larger chunks out of that debt over the years.
But…
You went to University and got a degree that put a set of pretty cool tools in your toolbox. You need to keep the lights on, the Mac and Cheese in the cupboard, your crappy car in the driveway, and the iphone in your pocket (those aren’t sarcastic criticisms, it’s using contextual comments from this thread to make a point). So, to keep those things going, you get the job that barely scratches the surface of the debt.
In the mean time…use those tools you put in your toolbox, network your ass off, learn how to build a business plan, use those killer design skills and CREATE SOMETHING YOU’RE PROUD OF. Make it real. Win awards, bring in the revenue and profit share that with your employees if that makes you feel good at the end of the day.
I guarantee you one thing. When you’re on the other side of that coin, and you’ve made it work, and you’ve won the awards, and paid off your debt. You’re going to realize that it isn’t any easier. That $98K (or less) that is left over from the above (likely fictional) scenario above doesn’t go far. You need to hustle to the next idea and make that work also.
I have no interest in judging Cash for their scenario. I’m right behind you if we’re complaining about the politicians and $80M CEO golden parachutes. But for most of us SMB owners…your angst is lost on deaf ears.