07: Achieving your profit goal: The formula I used to grow my business $100k in one year
Today, we’re going to talk about gaining clarity in your business by setting your one profit goal.
Notice I said profit goal, NOT revenue goal. I don’t care about your revenue right now. I care about your profit. What you’re able to take home. I also said one goal. I’m going to rein you in, girlfriend. One thing at a time. I know, it’s so tempting to do all the things, but as Gary Keller said, “Extraordinary results are directly determined by how narrow you can make your focus.
Years ago as a baby business owner, I was obsessed with tracking our revenue. Revenue was what I focused on, revenue was how I set our financial goals. But, as you can probably guess, at the end of the year when we looked at our numbers for tax time. The ACTUAL profit (or lack of) was alarming.
It was then that I took a step back to figure out my profit goal. What we realistically wanted and needed to take home to support our family and gain the financial freedom we desired. It was so empowering to know exactly where I needed to be to reach my goal, so every time I sat down to work, I knew the goal. I could look at what we were doing and ask myself, “Are we on track? Do we need to course correct?”
When you have sight of the end goal, those questions are easy to answer. I’m going to help you do that today.
By the end of this episode, I want you to have a crystal clear vision of your profit goal. I want you to feel confident that you can hit it. AND I want you to have a tangible realistic plan to get there.
Ready to dive in? We got this!
#1 Set Your Profit Goal
What is the number that you would like to take home after all expenses this year? For this example, I am going to use “Sara. Sara is a Florist and her profit goal is $100,000. That is what she wants to take HOME this year.”
Now, let me pause here. If this number seems crazy to you, just set a realistic profit goal for your business. If your profit goal is $5k, $10k, $20k – all of that is something to be proud of. A profitable business is something to be proud of. You are making an income for yourself and your family and you are well on your way to financial freedom
I’m using Sara’s $100k goal as an example here because it’s easy numbers (and I absolutely know this goal is possible).
#2 Determine How Many Orders you need to book to reach your goal.
First, we need to know our profit. The formula to calculate your profit is Revenue – Cost = Profit
Sara is a florist, so we are going to use weddings as an example, but use whatever you sell here:
- Sara’s average wedding sale is $5,000. That is on average, what she charges her couples. That is her REVENUE, the top number she is taking it.
- That wedding costs Sara $3,000 to produce (material, labor and customer acquisition)
- So, that means that Sara profits $2,000 in profit per wedding. Revenue ($5k- Cost ($3k) = Profit ($3k)
Now let’s take that and figure out how many weddings per year we need to book to reach our profit goal of $100k.
PROFIT GOAL FORMULA: Profit Goal ($100k) / Profit for each wedding ($2k) = 50 weddings.
>> If Sara wants to take home $100k this year, she needs to book 50 weddings.
#3 Breaking that goal down into milestones
Again, we are going to use Sara as an example here. Sara has a yearly profit goal of $100k. In order to reach that goal, she needs to book 50 weddings this year. So, naturally, the first instinct is to break that down in monthly goals.
MONTHLY GOAL FORMULA: 50 Weddings / 12 months = 4/5 weddings per month
>> If Sara wants to sell 50 weddings, Sara needs to book about 4-5 weddings per month.
But, we all know that Sara’s wedding business is seasonal. If your business is seasonal, I want you to take out a piece of paper and determine your SLOW sales months and your busy sales months. You may need to rev your engines during those busy sales months, so you can give yourself some grace when times are slow.
RECAP: Here’s what we did to determine that profit goal:
Step 1: Set the Goal
Step 2: Determined how many orders you need to reach that goal
Step 3: Break it down into milestones.
Sound doable? I want you to really take some time to do this. Take some time to look at your numbers and set a realistic goal for yourself! When I sat down and did this simple exercise, it set up my whole year for success. I gained so much clarity in my business. I was less anxious and I was truly FOCUSED on where I needed to be. This is what I want for you. I know it’s possible. Financial freedom is absolutely possible for you and your family. But you need to know where you are going.
Any questions? Shoot me a DM on instagram and tell me about your goals! I love to see you chasing those dreams, girlfriends.
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