A few weeks ago, I posted about the 7 Signs You Aren't Earning Enough. Sign #2 is that you don't have a clear financial plan. Without the plan, you are driving without a map. This is critical for your business success. Here are a few helpful hints for creating your own revenue projecttions.
Don't get stuck before you get started!
I get it – unless you are a super planner, planning and projecting are not always fun. Maybe you aren’t sure what would be realistic or maybe you feel like it is all just a guess anyway so why does it matter. Creating revenue projections serves two purposes. First, the process itself will force you to think about the things in your business you should actually be focused on and second setting goals gives you something to work towards. Without these revenue projections you are simply wandering aimlessly along in your business. You can't go anywhere unless you know your ultimate destination.
Creating your Revenue Projections Spreadsheet
1. Create a spreadsheet (using excel or a yellow pad). In the first column make a list of all the products and services that you currently sell or would like to sell during the next year.
2. In the second column next to each product or service enter the sales price.
3. In the third column put the number of units you would like to sell during the year.
4. In the fourth column put the total revenue which would be price times number of units sold. So for example, if I were listing my new Make More Money Tour with a price of $97 per person and I wanted to have 100 people participate I would have total projected revenues of $9700.
5. Now that you have completed the projections for each product or service simply total them together to determine your annual revenue projections. What did you find? Were you surprised at the number? Was it way too low or was it much higher than you thought?
How to Work With These Revenue Projections
Setting annual revenue projections is the easy part. The hard part is knowing how to use them. These numbers drive the marketing plans for your business but that is not easy with them in this format.
To make that easier I take these numbers a step further. I look at the number of units I want to sell during the year and I break that down into quarterly numbers. I’m not simply dividing that number by 4 – I am looking at what products or services I want to market and sell in each quarter.
So, if I were selling a class – like my 30 day product creation class – I might enroll 20 people the first quarter, 50 people the second quarter and 30 people in the third quarter.
By dividing each product into quarterly units sold I can now see what I need to be focused on from a marketing aspect. Then as each quarter progresses through the year I have a gauge of whether I am attaining my revenue projections.
The key to making this work – is to not just do your projection and leave it – but to look at it on a monthly basis (minimum) and make adjustments as you go along.