Don’t just pull numbers out of a hat when setting revenue targets. There is a better way!
Here are three high-level factors you should always consider before setting annual revenue targets:
1. What can you do to create/increase recurring revenue?
Whenever possible, your revenue stream portfolio should include one or more options for recurring revenue. This creates steady cashflow and gives you a more predictable base from which to operate your business. Continuity programs and automatically renewable subscription fees for either products or services are two examples to consider. You will, however, have to manage customer churn and retention rates to make it work. Customers come and go from such programs (that’s to be expected) so you must always be bringing new people in and you need to know how long, on average, you can expect them to stay.
2. What can you do to increase revenue from current customers?
If you’re managing your existing customer relationships well, you should be able to see growth in their spend over time. If customers you’ve had for three years have continued to purchase from you, that pattern is likely to continue. This makes it possible for you to make fairly accurate predictions about the level of revenue you can expect from this category.
3. What can you do to increase your customer base despite economic factors beyond your control?
Things never stay the same. Changes in your industry and competitive environment are some of the first things you should consider in terms of potential impact on your revenue in the coming year because these factors influence how many new customers you are likely going to be able to bring into your business.
Having looked at the bigger picture for revenue growth, you’re in a better position to consider your options for specific revenue streams. Here are 75 potential revenue streams to jumpstart your thinking.