Financial Success: How Much Money Does Your Business Need To Make?
A few years ago I set a huge lofty goal for this business to make $250k..within a year. In my head I felt like that was the perfect number for someone who works for them self to make to not only seem like they had "made it" but to also live a comfortable life. I wrote it on my vision board and even had a little affirmation that I attached to my beds headboard so it would be the first thing I read when I woke up in the mornings. But there were a few really big issues that I failed to acknowledge before setting this big goal for myself.
For one, my brand wasnt equipped to make this amount of money within one year. I never created an actual plan for how I was going to make that $250k and I was still short changing myself when it came to pricing my services. Meaning, even if I would have taken on 10 new clients per month I still wouldn't have even hit half of that $250k goal. The second issue was, I wasn't even ready to do the work that it was going to take to hit that goal. I still had the "If I build it, they will come" mindset and I was still trying to figure out the brand that I was actually trying to build. The 3rd issue was, I honestly didn't NEED that $250k amount to survive, which made that goal seem even more out of reach. I set that goal because that's what I thought business owners were supposed to make. Not because my bills equated to that amount (if I'm not mistaken I was actually still living with my mom when I set that goal) or because I had gotten close to that goal before and felt like this would be the year I could actually hit it.
The online world makes us feel like we need to hit these huge numbers in order to be successful. But that's not true at all. There is absolutely nothing wrong with wanting to hit that goal but at some point you have to also be realistic with yourself and the strength of your brand. So what do you need to do to make sure you're not only setting realistic money goals but also setting up your business to hit that goal?
QUICK NOTE: I've created a FREE financial success worksheet to help you to begin implementing what you learn in this post! Click the button below to download it!
1. YOU NEED TO GET CLEAR ON YOUR IDEA OF SUCCESS
Maybe getting rich isn't what you really want. Maybe you just want to make enough to be able to retire your parents. Maybe you want to make enough so you can quit your day job, send your child to college or simply just pay off your debt.
Setting realistic money goals starts with what YOU really want.
ACTION STEP: Before you continue reading think about what your idea of success is. What are you aiming for that will help you to live a more purposeful life?
2. FIGURE OUT HOW MUCH YOU ACTUALLY NEED TO MAKE
Again, you need to be crystal clear on how much you actually need to bring in to not only keep your bills paid but to also help you reach your desired level of success.
Keep these factors in mind:
- Your personal expenses. This means all of your personal bills including rent/mortgage, utilities, credit card payments, groceries, car payments, etc.
- Your business expenses. This includes but not limited to any and everything you use on a monthly basis to keep your business running. Think your website, any tools or software, shipping supplies and even items like office supplies. You'll also want to include in the amount for things you know you will need to invest in in the future as well. This can include hiring an assistant, purchasing a new computer, new graphic designer, etc.
- Your fun money. This includes money you want to be able to put towards things that truly make you happy like; vacations, dinners, etc.
- Taxes. You'll want to set aside at least 10-15% (or more) of your income to pay Uncle Sam. So factor that amount into how much you'll need to bring into your business.
After you've sat down and figured out your number, add it all up. That number is what you currently NEED to make each month. If you added up all of your expenses for the year, simply divide that number by 12. Feel free to round that number out or increase it to provide yourself with a little extra cushion.
ACTION STEP: Sit down and really map out your money. How much do you need to make each month?
3. TAKE A LOOK AT YOUR CURRENT OFFERINGS
Now that you know exactly how much you need to make, take a look at what you're currently offering that brings money into your business. Its important to keep track of how much you're making and exactly where your money is coming from for two reasons:
- You need to know whats currently working (meaning whats making you money) and whats not working
- You need to know exactly where that money is or isn't coming from so that you know what areas of your business needs adjusting.
For example, if I have a product that barely brings in any income each month, I need to think about how I can either revamp its marketing strategy OR let it go to focus on another product that's actually bringing in money. I love how Caroline of Made Vibrant keeps track of her products and how much they bring in each month and have began adopting it into my own business.
How many of your products or services do you need to sell each month to make sure you're hitting your monthly goal? Be realistic with this as well. If you know that you're only able to take on 5 clients per month without becoming burnt out then instead of adding 5 more on, you need to raise your prices so that you can make the most out of those 5 clients you are actually able to handle. Do the same for your products as well.
You'll also want to take a hard look at your marketing strategy. You should not have to do a major launch of a project every month in order to consistently meet your income goal. This is where its also a great idea to begin creating passive income for your brand. I show you exactly how through my Passive Physical Product mini-class.
ACTION STEP: Look at your money. What needs to be made each month in order to hit your goal? How much do your prices need to increase in order to meet that goal without becoming overwhelmed?
The key to making sure that you're consistently bringing in money to your business is to get extremely clear on how much needs to be made and what needs to be done in order for you to hit that amount. You'd be amazed at how much a small change in your marketing strategy and a slight increase in price can make a difference to the financial health of your business.