Answering 4 Questions Makes Your Revenue Goal More Achievable
What would it be worth to know exactly what every person in your business needs to do to achieve your revenue goal for next year? Imagine if every person’s objectives were set specifically to support the revenue goal! It’s actually simpler than you might think.
It’s all about tuning your revenue engine! Our business management model. Answering the right questions gives you powerful and predicable measures from which to plan and manage your revenue growth.
The questions are the same ones I’ve been telling you about for years. You just have to know:
- How much revenue can you generate with your current production or service capacity?
- How much sale effort is needed to fill that capacity?
- What lead generation is required from marketing to hit the sales goal?
- What kind of financial resources are needed to support this operational plan?
Set an Achievable Revenue Goal
Is your revenue goal achievable? The reason you ask this question first is frequently a revenue goal is set without really understanding what’s required in order to hit it!
With this question you’re really looking to determine how much revenue your business can generate based on your current resources. This doesn’t mean you can’t reach beyond your current capacity. But, you may need to set additional objectives to increase your current capacity in order to achieve the revenue goal you set. My previous post Knowing Your Operational Capacity will provide more insight.
Set Your Sales Targets
With the revenue goal set, it’s time understand specifically how many sales you needs to hit that target. Begin by understanding how much revenue is generated in an average sale. Then you can figure out exactly how many deals you need to close throughout the course of the year in order to hit your revenue goal. Take a look at the previous post Maximizing Revenue by Selling Excess Capacity for more help.
Now you have a sales metric set. You can measure weekly, monthly, and quarterly how close you are to your targets and adjust your efforts and goal accordingly.
Assure Your Marketing Plan Supports the Sales Effort
You know how many sales need. But, do you understand how much marketing is necessary to get there?
One thing that I frequently noticed is that small business owners don’t understand the difference between marketing and sales. Marketing helps you to generate the necessary leads so that you can close the deals (sales) to bring in the revenue.
You need a marketing plan that will generate sufficient leads to close the business you need. My previous post “Is Your Revenue Underperforming?” will provide you guidance on how to determine what you need from your marketing efforts.
Create a Budget that Supports the Operation
Once you understand the operational numbers a budget is easy. You just need to calculate how many people and then how many dollars you need in order to accomplish the work you’ve defined. An additional benefit is your budget is more accurate because it is based on facts that support your operational plan.
Make it Happen
So have you approached your business plan in simple and methodical way? Why not? Isn’t this easier than the “pick some wild guess out of the sky” most business planning approaches use.
You see the simplicity in working the numbers backwards? If you understand what you’re trying to accomplish, the rest fall right into place.
Our Calculating Your Revenue Engine’s Horsepower online training gives you all the tools and video support you need to do it yourself.
If you want help putting predictability in your revenue, DE, Inc. can do a business plan audit for you. Just send me an email with your contact information. We can get this completed for you extremely quickly to support your business planning efforts.