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August 31st, 2008, 03:37 PM   #1
sot
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Formula to calculate funds needed for business

Hello All,

Iím trying to help my friend figure out, how much money he needs to fund his business for six months. The following are the variables:

Average hourly paid per contractor 45
Hours worked per week 40
Amount of weeks he will have to pay of pocket 12
Average contractors per month 5

According to the variables above in three months, he would have come out of pocket $108,000 before actually getting paid.

Below is how to figure out how much money he will make in three month.

Average income per contractor per hour 15
Hours worked per week 40
Length of contracted work in weeks 12
Average contractors per month 5

According to the variables above in three months, he will profit $36,000.

The question is what formula I should used to figure out how much money he needs for 6 months. Also how long would it take him to be able to operate is business without borrowing money for the bank? Please advice. Thanks.

-SOT
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September 3rd, 2008, 04:02 PM   #2
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Re: Formula to calculate funds needed for business

Can't you just extend the logic?

If all of the average wages, etc, stay the same for the 6 months, then the amount he'll have to pay out of pocket, and the amount of profit will be double the 3 month period.

Or does he get paid every 3 months? If he gets paid every 3 months, he'll have to put $108000 out of pocket, and then he'll get all of that +$36000, then he'll need to put down $108000 again, but since he'll have an extra $36000, it's less of a dent...

Or am I completely missing something here?
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