Do you have a revenue goal that feels elusive right now?
In this episode, I am breaking down how to use Profit First to think about it differently and to get a different result.
Q4 for me is all about planning for the next year so that when the new year gets here, I can relax and pace myself through Q1.
There is nothing I hate more than feeling like I’m being slingshot into a new year.
While everyone else is off in a frenzy, I’m enjoying the shorter days in my fuzzy slippers with a book because I know exactly what needs to be done and when.
It’s called planning.
And yes, sometimes that plan gets revised.
As a matter of fact, most of the time the plan gets revised during my CEO Debrief sessions but that’s the easy part.
The first part of a strategic plan is setting your revenue goal and reverse engineering how you are going to get there.
This is essentially what strategy is — creating a plan to get you to a future goal.
Think about being at a kids soccer game — cheers to all you soccer parents.
When my daughter was in 4th or 5th grade, the team would always be where the ball was.
A bunch of girls on top of the ball. The result was not a lot of movement or momentum. They always stayed where the ball was. That’s not strategic.
Now that they are a few years older, they figured out that they need to be where the ball is going…not where it is.
The result, more movement and essentially more shots on goal which leads to more goals.
Strategy — go where the ball is going.
Go where the business is going. If you continue to take action from today, you will get today.
So, where are you going? In life and in business?
How much money do you need to get there?
Now, there are a lot of mythical benchmarks floating around in the online business space.
Ones that don’t exist in the non-online business space so I really want to break everyone free from this line of thinking of $100K as a benchmark or even $1M as a benchmark.
Nothing extraordinary happens when you hit a specific number.
What is more important is that your revenue goal allows you a clear plan to:
- Pay yourself well
- Profit wisely
- Helps you plan for growth.
This is why a $100K benchmark is problematic.
Now, I remember when I wasn’t making $100K and all the talk about hitting that first six-figure mark was very confronting to me.
It was talked about in a way that made me feel shameful because I wasn’t there yet and annoyed that I wasn’t there yet.
But really, all my emotions around this number weren’t helpful or supportive in moving toward this particular number.
Maybe you feel this way not with all the talk in the online business space being about $1M. Maybe you want to hit that $1M mark so bad, it actually hurts.
I get it. Which is exactly why I’m bringing it up.
I understand what I’m about to say is going to stir up some things for some of you that you might not like but you have to hear this…
$100K as a goal SUCKS and is most likely keeping some of you who are at that level stuck.
And I’m going to explain why.
Have you ever fallen short of a goal? I know I have. So if you’re choosing $100K as a goal and fall short by 20%, you will be at $80,000 in revenue.
Then you’re going to start a narrative around what it takes to get to $100K. Well, I guess I wasn’t good enough to hit $100K so I might as well make that goal for myself again.
NO, this is small. This is shrinking.
Maybe we should eschew the concept of SMART goals especially the part that says our goals have to be realistic. Because oftentimes we interpret realistic as safe which isn’t very exciting.
I’m going to go out on a limb here and say being realistic is hurting you.
Also, let’s look at how this $100K serves you…
Based on profit first, if your business brings in $100,000 it gets allocated in the following way:
- Profit: 5% or $5,000
- CEO Pay: 50% or $50,000 — alarm bells should be going off right now.
- Taxes: $15,000
- Opex: $30,000 That’s $2,500 in monthly operating expenses.
This was my biggest aha moment in my business when I started — 6 figures in revenue does not equal 6 figures in salary.
But here’s what does bring in 6 figures in salary…$250K in revenue.
- Profit 5%: $12,500
- CEO Pay: $125,000
- Taxes: $37,500
- Opex: $75,000 or $6,250 per month which gives you growth capital, marketing, and team.
Profit can pay down debt if you have it or be put toward a vacation or home improvements or buying a home. Your CEO pay gives you more than enough IF you have secondary income coming in. This gives you money to invest in your net worth and social causes that are important to you.
Now, we are actually starting to get somewhere.
And if you fall short of this goal, you’re still way further along than falling short on a small goal.
Now, you might not reach this goal in a year — but we want you to employ the strategy, energy, and mindset to get there!
$100K is a great pit stop but you have to think beyond that.
Which is different than when you are feeling confronted by $100K and setting smaller goals.
Do yourself a favor when you sit down to map out your vision and goals — THINK WAY FREAKING BIGGER.
Same goes for you if you’re setting a $500K goal but really want to go for a million. THINK BIGGER.
Set the goal that stretches you to develop a plan for what you really want. Set a goal that stretches you to become the person who hits that goal. Stretch yourself to get creative and think outside the box.
Now, I hear people talk about having to release the how when they are setting their vision. Before I wind down this episode I want to talk about this….
Cast your big vision. Yes. Think 3-5 years down the road. Yes!
Don’t worry about how in the vision casting stage. Yes, that’s correct.
BUT you do at some point need to consider how. Here’s when to start thinking about HOW.
First comes WHAT — that’s your vision.
Then comes WHY — your reasons for this vision. Make them good because this will keep you going when it gets hard.
Third is HOW. How is where you reverse engineer the goal and get it down on paper.
So, to recap…
The first step is setting your revenue goal.
When you set your revenue goal, think about what things truly cost in your life and business
Think bigger so you take bigger action. This doesn’t mean A LOT of action. This means taking your boldest actions.