MBA1754 How To Set Revenue Goals That Work

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Heyoo. Welcome to the $100 RBA shows. Short and sweet and to the point every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my partner back in 2014. And in today's lesson you will learn how to set revenue goals that work. We all know we want to grow, we want to make more money, but how much more? How do you set yourself up and set goals that make sense and grow with you? This is a challenge for a lot of entrepreneurs knowing exactly how much to shoot for given their industry, their market and their business in particular. We'll also talk about how to set revenue goals in relations to profit because at the end of the day you want to know how much money you're actually putting in your pocket as well as how do you make sure you're on track and you're measuring as you go along. We get into all that and more. So let's get into it. Let's get down to business.

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Edu Money, money, money. Right? We all want to make more money. We want more money coming into our business and that's why we set revenue goals. We want to push ourselves to reach a level of success monetarily with our business as we move forward in our business every single day, every single month, every single year. But I want to stop for a second and I want to question, why do you want to make more money? Okay, I know that sounds strange, but yes, we need to understand why do we make more money? Well, most of us want to make more money because we feel like we make more money, we'll keep more money. Well, that's not necessarily true. If your business is has a problem with spending, has a problem with spending money or money that you don't have yet. A lot of businesses do this. The overspend their expenses, their P and L sheet is lopsided. Their losses are a lot more than their profits. So I want you to see your revenue goals in relation to profit. So before you set any revenue goals, you need to take a look at your P and L sheet, your profit and loss sheet. How profitable are you? If you're not profitable right now, your goal should be to get as profitable as possible. Step one is to cut as many expenses as possible to get you to that profitability line. Some of us, even after cuts, are not going to be able to be profitable. This is where your revenue goals come in. How much money do you need to make in the next month, in the next quarter to get profitable? This should be your first goal. Make enough money to be profitable. And this is easy to attain if you keep your expenses down or you pivot or change or customize your business where you sell products or services that have a high profit margin. This is a little easier in the services than it is in the product industry, especially if you're in E commerce where you have a fixed cost for the cost of your products. But maybe you should take a look at your products, which ones are more profitable than others and see if you can push those a little bit more. So our revenue goals are going to be tied to our profitability goals. So I like to work in quarters. Every quarter gives me enough time to hit my goals. Sometimes my marketing and sales efforts that I do one month will not bear its fruit until the next month. That's why I don't like doing monthly goals. It just doesn't make any sense in terms of achieving my goals. So let's Say, for example, my expenses are 8,000 doll and my revenue is $10,000. That means my profit is $2,000 a month. I'm going to multiply that by three for three months. That's $6,000 in profit every quarter. I want to increase my profit by 5% every month. That means 15% every quarter. So 15% of 6,000 is $900. That means by the next quarter, I want to be making a profit of 6900. Where am I going to get that extra 900 bucks in profit? Well, in my revenue, I need to fig much revenue. I need to make extra that quarter to make $900 in profit. If you have a fixed cost, like a software company or something like that or maybe a online course, then this is easy. That just means you need to make $900 more in sales. But if you have products that cost you money to acquire, then to sell them, then you need to know what the profit margin on those products. So you can make up to $900 in profit in three months. So work backwards so you know how much extra revenue you that's your revenue goal for the quarter. This is actually a really, really good method because that way you're growing your profit by 5% every month, month over month, each quarter, 15%. And this is going to allow you to grow in the beginning. It may not seem like a lot, but let's do the math. Let's say, for example, before quarter one, your profits for last quarter was $6,000. You hit your goal for 15% and you're at 6,900 at the end of quarter one. Let's take a look at what you're going to be making in profit by the end of the year. By the end of quarter two, if we hit the same goal and we make 15% more in profit, we go from 6,900 to 7,935. If you do the same thing at the end of quarter three, we're at 9,125. And then by the end of the year, at the end of quarter four, you're at 10,494, nearly $10,500 in Prof. You go from $6,000 at the beginning of the year in profit to $10,000, $494. That's a little over 40% in total increase in profit after just one year. See how these small little goals, 5% a month and a total 15% for the quarter, you are pushing yourself slowly but surely, and you're not moving the goalposts I'm not one to constantly be moving my goals. I like slow, steady growth. I like compounding my interest. Like to make sure that I'm just on track. On track is key. It's better for you to just consistently hit your goals and see your numbers go up month after month rather than shooting for the stars and having one huge month and then a down month. You want consistency, so set your revenue goals in this way.

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Tie your revenue goals to your profitability. Find out how much money you need to make in revenue to increase your profit by 15% every single quarter. Work backwards and hit those goals month after month. We're not asking you to do, you know, 20% increase in profit every single month. We're talking about 5%, 15% in total for the quarter. Work towards that quarter goal. Achieve it. Do the same thing the next quarter and see your business grow. Slow and steady wins the race. Thank you so much for listening to the 100 OMBIE Show. If you love what you hear, smash that subscribe button on whatever app you use to listen to podcasts. By subscribing, you get all our archive episodes for free. Over 1700 business lessons. Go ahead and do that right now. Before I go, I want to leave you with this. How do I track all this? Well, with a Google sheet that simple. With a spreadsheet, I just know exactly what my profits and losses are with my P and L sheet, what my expenses, what my revenue is, my I know my profitability is. And then I do projections by 5% every month. Try to hit 15% at the end of the quarter. I set myself goals. I know what I'm shooting for. It's important for you to keep it simple so you can follow it along so you can keep doing it so you can stay on track. A simple spreadsheet is one of the best things you could do for your business. Thanks so much for listening and I'll check you in tomorrow's episode Q and A Wednesday. I'll see you then. Take care.

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Eduardo.