Do you know how much money you ACTUALLY make?
Do you know how much total revenue you bring in and where exactly it comes from? Do you ever discuss your revenue goals with friends? For some reason "money" is this taboo subject that seems off limits for so many conversations, even with people we claim are "besties". Despite us all working most of our life in exchange for it and constantly looking at ways to increase it (even for those of us without expensive taste), it's still something we rarely bring up in day-to-day conversation.
My intention with this post is to get you thinking about your money in a more structured way which may help you open up to others about your goals and needs. I believe we ALL need to be more open about money (you can read more about my venting on this here), especially those of us starting and growing creative small businesses.
What is your total annual revenue?
How much would you like this to be per year?
What's the gap between the two?
These are just three of the questions I include in my initial questionnaire with my coaching and consulting clients. I have zilch judgements on their response, but need to understand are they surviving or thriving? And, what might they do to shift from one space to the other?
These are questions I also ask myself each year. I review my past year and come up with a figure I need to "thrive". For me, thriving means being able to easily contribute to our mortgage, go on O/S holiday every year, purchase books (#totaljunkie) and invest in my learning, put money into a savings account for our son and ourselves, buy some new things and increase x% on the year prior (to know I'm building the business rather that staying stagnant). But to you, thrive may mean something totally different. The first step is to figure out what your "thrive" figure is.
From there, you look at what you offer (aka your revenue streams). For me this is:
Client Consulting (Content, Marketing, Business)
Writing (online / print publications)
Templates (Content, Marketing, Business)
I review my thrive figure and add a revenue stream goal to each of the things I offer. I then break these down into weekly and monthly goals for the next 12 months.
For example, if I charged $100k per client workshop (wouldn't that be nice?!) and I had an annual revenue goal of $1m for these, I'd need to ensure I had a minimum of 10 per year booked in.
If you sell products you may look at your entry-level to high-end offerings and work out how many of each you'd need to sell and how you may increase these (through bundle offerings, limited edition higher priced items, collaborations (i.e. with a hotel or artist) and/or increasing frequency of wholesale orders).
Once you have your figures, you need to ask yourself these questions:
What does this look like on a weekly, monthly basis?
Is this realistic?
Do I have the time to action everything I need to?
Do I need to work with anyone else to achieve these (such as a VA or partnerships manager)?
If nothing else changed, how could I achieve these goals (i.e. for online stores increasing average transaction value through bundle offering)?
Who do I need to become to make this work?
The last step is to review your expenses. What did you spend money on the year prior that didn't add to your business? This may have been staff you didn't need, subscriptions to online platforms or business groups you didn't benefit from / use, or overheads you could cut back on (such as using a hot desk in a co-working space rather than renting an office). It may also be your freight company, certain in-store events or even your POS system.
This is just a basic start to understanding how much money you bring in and exactly where this money comes from. I'm not a financial planner, nor am I an accountant, but I do think every small biz owner should have a general understanding of their figures and the above is a simple way to start.
Check out my free revenue cheat sheet which will help you as you’re starting to work through the process of identifying your key revenue streams!