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Selling things does not mean you’re in business. Making money means you’re in business.

Setting revenue goals for your business is important — we all agree on that. But it’s not enough to ensure your financial goals can be achieved if all you have done is determine how many dollars you want to bring in the door this year. This is true even if you have been diligently setting daily, weekly, monthly and quarterly revenue targets.

To achieve the financial goals you’ve set for your business, they must be broken down into “units of sale” and set up in a way that lets you align your business strategies and marketing tactics to meet them. Three critical steps are involved in this analysis:

  1. Calculating your monthly breakeven amount
  2. Setting minimum revenue goals
  3. Determining the number of unit sales required

1. Calculating your monthly breakeven amount

To determine your monthly breakeven number, list all of your known expenses starting with your personal expenses. Paying yourself first is an important habit to acquire.

Then, determine your hard costs (these are expenses that must be paid whether or not you have any revenue during the month).

Add the two totals to find out how much revenue must be brought in the door if you don’t want to lose money.

2. Setting minimum revenue goals

Now that you know your breakeven number, add to it what you want to make in profit. While you can set any % you want for this, we encourage clients to not go lower than 30%. But, at the very least, you want to make sure the minimum is enough to cover expenses to ensure you are not going to be losing money.

Some people like to set minimum, target and stretch target revenue goals to provide more flexibility. If this approach appeals to you, you might decide to set the minimum goal at your breakeven number, the target at your breakeven + profit number, and the stretch target at target + 20% (or more if you are feeling aggressive).

3. Determining the number of unit sales required

Finally you are ready to drill down to specifics — unit sales by revenue stream. These are the targets you want to define, monitor and work steadily toward achieving in your business.

Revenue streams are simply the things you sell. Most in our community have 2-5 revenue streams. Base financial goals on how many units of each product or service must be sold to achieve desired revenue targets.

For example, if you are selling 3 different products plus offering private coaching you have 4 revenue streams. If, based on last year’s sales history, you know:

  • 70% of your revenue came from coaching and
  • 30% came from your other 3 revenue streams (with 6% from product 1, 13% from product 2 and 11% from product 3)

then you can use these %s to calculate the revenue needed to meet this year’s financial goals. Or, you can make adjustments based on changes you want to make to your revenue streams this year.

By doing these calculations for each revenue stream and setting revenue targets appropriately, you’ll be able to put together strategies and daily action plans that more directly support your financial goals. Monitoring your actual performance against what you forecast, helps you address shortfalls in sales in a more timely manner.

Give yourself a fair chance to regroup and change your game plan throughout the fiscal year. It significantly reduces the stress you experience when revenue isn’t where you’d like it to be.

When setting financial goals for your business, think in terms of how many unit sales you must make in each revenue stream. Don’t focus on that one big magic number. Drilling down to unit sales is the key to hitting the numbers that mean success to you this year.