As a new business owner, it can be kind of overwhelming to figure out how to meet your annual revenue targets.
In the midst of pages and pages of notes, research, business plan drafts and product ideas, you can get very stuck.
So set aside your MBA and PhD-trained minds for a minute, and play along with a game of math. If you laugh mockingly in a Dr. Evil kind of way at the simplicity of the concept, I can only share the following nugget:
Common sense is rarely common practice.
My favorite coaching mentor Andrea Lee describes a very simple process for figuring out revenue targets in her book Multiple Streams of Coaching Income. This book is built on the premise that thriving coaches (and consultants, or any service-based business) need to develop multiple streams of revenue besides their hourly consulting time. These additional streams can be things like group coaching programs, electronic books (E-books), teleclasses, membership websites and a whole variety of other things.
Her process is called The Money Game. You will need the following things:
- a pad of paper
- a pencil
- or, if you are fancy, a spreadsheet
Now take the following steps:
- Write your annual income goal at the top of the page. It doesn’t matter if it is $10,000 or $100,000 this year. There is no right or wrong answer.
- Create three columns on your page.
- In column 1, list your products or services.
- In column 2, list the cost of each product or service.
- In column 3, list how many units you think you can sell of each product or service.
The game comes into play as you begin to juggle around the mixture of what you want to offer. So in example one, you imagine one mix of services and products:
After review, you may feel like it is wildly optimistic to sell 100 E-books a month, so you revise your estimates downward to a more reasonable number. You may also want to increase your monthly consulting hours, as you think it will be easier to sell consulting than products at first. Then you might decrease the number of new members to your paid membership site, but increase the monthly fee.
Thinking some more, you choose to add two new programs to the mix: a once a year live retreat for your clients, and a group telephone coaching program held twice a year. Knowing it will take time to develop and promote these programs, you decrease your consulting hours.
The possibilities for mutation are endless. The key is to keep juggling the numbers around until you reach a mix of products and services that feels comfortable and feasible for you to accomplish. Andrea says in her book:
“When forecasting the revenue for your coaching business using the multiple streams approach…you can use a slide rule for each of the pertinent numbers.
And for each of the numbers, you can experiment with putting in the numbers that you are most comfortable with.
So, whether it’s the number of people you project, anticipate or research tells you can scientifically expect to buy your product OR
Whether it’s the price tag that you would be comfortable pricing your material at,
You can shift those numbers up and down until you end with a monthly gross revenue number as well as a yearly number that fits into the bigger picture of your yearly financial goals.
This may mean that you have 5 revenue streams, or 15. Or it could mean that you only have 3. Try it and see what you come up with, because the real magic of The Money Game is when you extrapolate it and personalize it.”
You can play the Money Game as you launch your business, and revisit it every month or quarter. You may decide to add or remove products. You may decide to launch a new program. The key is to break your large annual financial goal into realistic pieces.
The more concrete you are, the more likely you will reach your goals.
Have fun, and let me know how it turns out.