New year = new revenue goals? Most business owners put on their planning hats around the end of the year. It’s an exciting time to be sure. A new year holds so much promise, and if you are an optimist (like we are), you are dreaming big! If reaching new revenue heights is part of your business plan this year we have got THE Blog for you.
So what is the secret to reaching that magic revenue number? The key to actually reaching those goals is to get really granular when it comes to setting your targets. Not sexy, we know! But true. It’s not enough to say I want to make X by the end of 2023. You have to first take a closer look at your business numbers and see what they are telling you, breaking things down to a step-by-step approach. After all, a goal without a plan is most likely to stay a dream. Here’s the breakdown of what you need to know to take that goal from dream status to reality status
Read on for the recipe for an air-tight revenue goal.
Before we can talk about how much money you want to make, we first have to talk about how you make your money.
➡ What are your revenue streams? These will vary depending on your business model, but can be a combination of services, group programs, physical products, digital products etc. Go ahead and make a list of ALL the ways money came into your business this year.
As you are doing this, some questions may pop into your head:
This is where we encourage you to start getting granular in your goal-setting process, so you can get clarity on these questions that are popping up for you. This means opening a good old spreadsheet and planning out your year, month by month.
If you don’t speak spreadsheet, we have made this step super-simple for you with My Profit Planner. - a plug-and-play template that will break your big goals into an actionable monthly plan. You'll see exactly what it will take to achieve your revenue target, pay yourself more, improve your cash flow, and have greater confidence in managing your money.
Seeing your revenue sources in a list or spreadsheet will allow you to play around with the numbers and get a real sense of what you need to restructure in order to reach your goals. This is important work because it will show you where to invest your effort in reaching your goals. If the numbers tell you that you need to double the number of clients you serve, then your goals might be aligned to investing in marketing. If your numbers tell you that there is no way to reach your goals with your current service offerings and pricing structure, then you will need to re-evaluate your offers and services, revisiting your pricing model along the way, in order to get to where you want to go.
Your numbers can tell you more about your business than most business consultants can, so spend some time and get to know them.
There is a big difference between what you are making in your business and what you are keeping. The difference is where profitability lies, and is probably the most important goal to focus on when planning out your goals. Your revenue goals are great, but without a plan to keep expenses in check along the way, your revenue goals won’t give you the outcome you were hoping for - which is to see money in the bank!
This is where it’s time to make sure you have an operating budget set up.
Your operating budget includes all the things you need (and are paying for) in order to run your business. This can look like salaries, monthly subscriptions, rent, and more. But there are a couple of expenses that people often overlook - your salary and your taxes.
Yes, you heard us right.
By now you have probably noticed that what you make and what you take home are not one and the same number. That’s why when people shoot for an arbitrary number like 10K months, in the back of our mind we are always thinking “is that after tax and is there enough left over to pay yourself a salary too?”.
In short, having a fail-proof operating budget planned out means you’ll have true clarity on what will be left over after your bills are paid, and most importantly, how much you can afford to pay yourself!
In the finance world, our money-focused business goals have a specific name: profit projections. Profit projections are part goal and part educated guess. They are based on the historical numbers we talked about, but with one key difference - they face the future and are growth-focused. This is the part everyone gets excited about. This is the stage of the goal-setting process where you essentially have the opportunity to pressure-test the revenue goals for your business. That means seeing where your blind spots are ahead of time, rather than scrambling in real-time six months down the road.
Seeing your profit projections each month allows you to get ahead of times when you might be getting into a cashflow crunch. This gives you the opportunity to work backwards and plan for any necessary adjustments that are needed, such as tightening up on expenses or making a plan for additional revenue streams.
Profit-based planning means your revenue goals support your desire for:
➡ Positive cash flow (meaning you are keeping a positive bank balance)
➡ Take-home income for yourself - because you need to get paid too!
➡ Peace of mind knowing your efforts are keeping your books in the black
Pro tip: Don’t forget to plan for the taxes (and remember your bill will increase the more money you make)
The Bottom Line
There’s business goals, and then there are business goals grounded in actual numbers. The difference between the two is that one is way more likely to happen than the other. Something powerful shifts when you see your numbers on paper. For a lot of solopreneurs this is the moment when they start seeing their business as a business for the first time. As something scalable, as something bigger than just themselves. If you have those kinds of dreams and want to chase them, do yourself (and your biz) a favor and get to know your numbers. They will literally tell you which direction you need to go in and maybe even more importantly, which to avoid.
Interested in learning more from us? Follow along with us through our social media accounts (find us on Instagram @growcpa) and sign up for our newsletter for more educational and fun financial content.
Wishing you success in your business,
- Martina + Ashli
Date published: January 15, 2023
Disclaimer - The information provided in this blog is general in nature and solely for educational purposes. Readers use and implementation of the information comes at their own risk and is their own responsibility.