How Much Money?
How much do you want your business to earn monthly? It’s surprising how many businesses lack a clear target. The answers vary widely—some aim for $30K per month, while others dream of $30 million. Identifying this number is the first step in setting a concrete financial goal.
What Does That Number Mean?
We dive into what achieving this number would enable you to do. This discussion helps prioritize your needs and wants, aligning your business strategy with your personal and professional aspirations. It’s about understanding the impact of reaching that financial target on your overall vision for the business.
How Many New Customers Do You Need to Reach That Number?
Next, we analyze how much each customer currently contributes and how much of that is profit. After a bit of math, we identify the number of customers needed to meet your revenue goal. This exercise creates a clear and achievable growth target, providing a roadmap for scaling your business.
Reality Check
Often, we find that the current business model isn’t capable of meeting these goals. That’s when we explore what changes could be implemented to bridge the gap. This might involve tweaking your business model, refining your marketing strategy, or identifying new revenue streams.
I find this approach incredibly effective in helping business owners critically assess their revenue strategies and overall business model. By starting with these questions, we can create a solid foundation for a tailored and successful consulting journey.
Additional Insights
These three questions compel business owners to view their situation from a new perspective. Often, they have a revenue target that their current business model simply cannot support. For example, imagine a restaurant operating from 11 AM to 9 PM, earning $120K per month, but the owner wants to reach $300K. After some discussion, we discover that the restaurant is already at capacity during peak times, with only a small gap in off-peak hours. To more than double their revenue, they’d need to significantly raise prices, open another location, or find a new approach.
That’s when we turn to products. Whether it’s a restaurant or a welding and fabrication company, we try to help them find a product they can produce using their existing resources. This could be something done during off hours, with the potential for scaling up and selling online or in-store. For instance, one local restaurant had an incredible homemade ranch dressing. We helped them source bottles, labels, bottling tools, and labeling equipment, enabling them to bottle and sell their ranch. In its first month, this new product generated $8,000 in profit. While it’s not a huge gain, for a restaurant making $100K per month, it’s nearly a 10% increase without needing additional staff—just a few hundred dollars in equipment and an extra hour or two of work each week.
The bottom line is, if your business model doesn’t match your goals, you need to change the model or adjust your goals.