One of our divisions does nothing but consulting, so the prime focus of conversation has always included such factors as billable rates per hour and the percentage of billable time. However, a third factor is worth a considerable amount of attention, as well – the number of business days in the month. Sounds simple, but it tends to be ignored. Using the standard number of federal holidays in the United States, here are the number of months with different quantities of business days:
Number of Business Days per Month |
Number of Months |
23 |
1 |
22 |
2 |
21 |
1 |
20 |
6 |
19 |
1 |
Total Months |
12 |
Figure out the number of business days it takes for your consulting or service business to break even. If it takes 21 business days, then you will lose money in 7 months out of 12. If it takes 22 or 23 business days, then you have a real problem. If this appears to be an issue, calculate the expense reduction required to reduce your break even point by one incremental day. This is an excellent approach for monitoring how well your business is structured to make money throughout the year.