New York magazine puts a few economists on the trail of various small businesses in Manhattan to identify their business models and see exactly how much money they make.
- A private school earns a 10% profit on revenues, with about 54% of its revenue spent on salaries.
- Cab drivers make only about $12K profit per year.
- Discount stores (like Jacks 99 cent stores, or presumably like the Japanese dollar store in Seattle) earns $7M profit on $30M revenue for three stores. Their costs are low because they procure goods that are essentially dumped on them for pennies by manufacturers who need to get rid of stuff.
- Good sushi restaurant in a good location, serving 250 meals per day, earns $8.5M, of which $1.7M is profit. Most restaurants (like small pizzarias) make about 10% profit.
- Yoga studios make $77K, with $24K in losses, so most are out of business within three years. If you're an instructor thinking of starting a studio, it's much better to do private lessons instead.
Some other rules for starting a small business: rent for a bar should be no more than your Friday night take and a restaurant's should be about one week's revenue.