How to Choose a Revenue Goal (even if you don't have a lot of it yet...)
A few weeks back we talked about WHY it was important to choose a revenue goal. But then a few of you asked a question that surprised me. You wanted some insight on HOW to choose a revenue goal that’s right for you. So I thought about it and created this post (and a guide with all the action steps) about how to choose a revenue goal based on the stage of your business.
Here’s what I’m going to cover so you can skip to the section that best meets your needs:
How to Choose a Revenue Goal if You’re Just Getting Started (or rebooting)
How to Choose a Revenue Goal if You Have Inconsistent Revenue
How to Choose a Revenue Goal if You Can Pay Yourself Consistently
How to Choose a Revenue Goal if You’re Running a Profitable Business
How to Choose a Revenue Goal If You're Just Getting Started (or rebooting)
If you’re just getting started with your business (or you’ve done a big revamp) you may not have a lot of revenue. So you might wonder if setting a revenue goal even make sense. I’d say absolutely yes. If you plan to build a sustainable business that can support you and beat the odds, your business needs to bring in revenue.
Your 2024 revenue goal is to bring in enough money to at least cover your business expenses.
By the way, if you’re not sure what your business expenses are because you’re just throwing them on your credit card along with the groceries, I’d recommend getting a handle on that as priority number one for next week.
For more action steps you can take to get a handle on your expenses and hit your goals at this stage, download the guide.
How to Choose a Revenue Goal If You Have Inconsistent Revenue
A lot of businesses stay at the inconsistent revenue stage for a long time. Inconsistent revenue is not the same as seasonal revenue. Seasonal revenue means that you can predict that you have more revenue in Q1 and Q3 and not so much in the summer. Inconsistent revenue means that you’re still in the building stages and that perhaps you haven’t settled on your core offer or developed a foolproof lead generation system.
Your 2024 revenue goal is to start paying yourself a consistent salary.
It doesn’t matter if that salary is only $1,000 a month. The next step in managing your business money after covering your expenses should be paying yourself (and making sure you’re setting aside enough money for taxes.
How long you stay in this phase is generally up to you. My rule of thumb is that I stay in this phase until I match the salary I could be making at a corporation. But this is a largely personal definition. For some of you it will be until you can cover all your personal expenses and set aside a certain amount for savings. For others, it’s a percentage of the family income. For a lucky few, it’s the amount it will take to cover the fun extras like family vacations or traveling in style.
For specific action steps if you’re in this phase, check out the guide.
How to Choose a Revenue Goal if You Are Paying Yourself Well
If you are covering your business expenses and paying yourself a healthy salary, you might choose to stay at the previous stage and just keep giving yourself raises. But if you’re in this to build something sustainable and ongoing that defies the small business odds, I would recommend the following:
Your 2024 goal is to build a cash reserve of 3-6 months of operating expenses (including your salary)
As someone who’s started multiple companies (and shut one down during the financial crisis), I can’t recommend this strongly enough. There may come a time when your business is negatively impacted that you just can’t see coming (global pandemic anyone?). Why not do your future self a favor and build a safety net into the business so you don’t have to turn to your personal reserves right away.
How to Choose a Revenue Goal if You're Running a Profitable Business
This is where having your own personal definition of success comes in. Because if you’re covering your expenses and paying yourself well and you’ve build up a safety net and you have money left over….. We’ll this is where business actually gets fun.
Your revenue goal is to think about whether you want to stay where you are or keep growing.
You could hire someone to help you and grow your revenue. But there is absolutely no imperative to grow. You could instead hire someone to help you and work less. Or you could rent better office space or invest in professional development. Or you could do exactly what you’re doing right now and pay yourself some big bonuses.
By the way – this is the goal. To have enough money left after paying yourself to be able to make choices about what you want to do with your business. I hope this post has given you some new insights and perspective on how you go about setting your revenue goal this year. And if you want the step by step action items, feel free to download my free guide:
How to Choose Your Revenue Goals (even if you don’t have a lot of revenue yet…)
And if one of your goals for 2024 is to increase your revenue – the 100% guaranteed way to do that is to raise your prices. I’ve got a pricing calculator included in my Pricing Toolkit that will help you do that.
