How much money do you want to make this year? Setting a meaningful, yearly financial goal for your agency is the best way to guide you into making smart choices that lead to growth and success. Allow your long-term vision to direct your short-term decisions.
Hello! Our goal at Harpoon is to empower you to take control of your agency's finances, make more money, and eliminate some of the stress involved with running your own business. Every feature of our product has been designed to assist you in carrying out four simple rules we call The Harpoon Method. This method, combined with our friendly software, empowers you as a business owner to take total control of your time, billing, and expenses, and puts you in charge of accomplishing your financial goals. Ready to dig in? Let's do this!
Setting a yearly financial goal for your agency is an important first step towards financial stability. Your yearly goal will ultimately shape how your business operates, including the types of clients you work with, the kinds of services you offer, and the amount you charge for those services. We're about to walk you through the process of determining the right yearly financial goal for your business. But first let's set the stage with a quick story. A true story.
Note: Whether you're an independent freelancer or someone running a multi-employee agency, the principles outlined in The Harpoon Method can be applied to businesses both small and large. Feel free to adapt these best practices to your unique situation and have fun making it your own!
My first year as a self-employed designer was a frightening whirlwind of stress, uncertainty, and just plain "winging it." I had years of proven design skills under my belt, but I was suddenly faced with the reality of needing to convert those skills into a real business that made real money.
And if you had asked me how much money I wanted to make during that first year, my answer would've been, "As much as I can!" It's an honest answer, but not one that helped me run a successful business.
Instead I found myself saying, "Yes!" to every project I could find, working too many hours, and eventually burning out. I wasn't really running my business. It was running me. Something needed to change.
Things started to turn around quickly when I took my first step towards financial stability. "As much money as I can!" wasn't cutting it. Instead I set a very specific yearly revenue goal for my business.
I figured out exactly how much revenue I needed to generate each year in order to cover my business and personal expenses, make a healthy profit, and live the lifestyle my family and I desired. I was then able to work backwards from my goal, shaping and building my business up to achieve my desired income.
This was one of the keys that helped transform my business from an unpredictable roller coaster ride into a stable, profitable, and enjoyable career.
A financial goal allows you to advance from a reactive mindset to a proactive one.
Whether you're an independent freelancer or someone running your own studio or agency with multiple employees, setting a financial goal for your business starts with setting your personal goals. Ideally the business you're running will generate enough income to support the lifestyle you desire. But how much money will that take?
Let's take some inventory of your lifestyle. Whether you're new to running your own business, or have been at it for years, you probably have at least a general idea of how much money you need to make each month to support your current lifestyle.
Setting a financial business goal starts with setting your personal goals.
But let's get specific. The more specific you get with the amount of money you need, the more confident you'll be with running your business, and that includes the types of clients and projects you take on and the amount you need to charge for those projects.
Grab a piece of paper (or your favorite note-taking app) and make two columns. Label the first column, "Business" and the second column, "Personal." Brainstorm all the different categories of your business and personal life you need to account for, and jot them down in the appropriate columns. Don't worry about how much money is involved just yet.
In your business column you might have categories like software, office rent, health insurance, accountant, contractor or employee salaries, etc. In your personal column you might have categories like groceries, housing, transportation, clothing, childcare, etc.
And don't limit your categories to expenses only. If your business is simply covering your expenses, then you're only breaking even. A healthy business is one that can profit and grow.
So you'll want to include categories that take advantage of a surplus of revenue you'll be generating that goes beyond simply covering your expenses. These would include categories like savings goals, investments, emergency funds, retirement, charitable giving, side projects, and even vacations.
Once you have a healthy list of categories, you're ready to start calculating the actual costs involved with those categories.
What we're ultimately after here is a yearly revenue goal for your business. It's the amount of money your business needs to bring in each year in order to cover your expenses, make a healthy profit, and support your current lifestyle.
To find this number we'll start by taking the business and personal categories you brainstormed earlier and assigning a yearly financial amount to each one. This might require a bit of math.
Tip: Math might not be everyone's cup of tea. But don't sweat it. Just follow along and when you're ready, simply use our free Yearly Goal Calculator, which handles all the math for you. Nice!
For example, if the office rent for your business is $500/month, its yearly amount would be $6,000. And if your personal grocery bill is $100/week, its yearly amount would be $5,200.
Do this for each of your business and personal categories until you have a yearly amount for each one. Then add together the yearly category amounts to get a total yearly amount for your business and a total yearly amount for your personal life. You can now calculate your yearly revenue goal like so:
But wait. What about taxes? You won't get to keep all the revenue your business generates. The government will want its cut. So you'll need to generate even more revenue than you calculated above in order to cover all your category amounts and have enough left over to pay taxes.
This is where the math gets kind of messy, but thankfully our free Yearly Goal Calculator mentioned earlier will also handle the tax calculations for you.
Congratulations! You now have a grand total for a yearly revenue goal that covers all of your expenses, includes a healthy profit, supports your current lifestyle, and leaves enough left over to pay your taxes.
At this point, if you're just starting your business you might be like I was and somewhat intimidated by the yearly revenue goal amount you came up with. I distinctly remember thinking, "There's no way I can generate that much revenue. That's way more than I was making as an employee!" If you're having similar thoughts here a few things to consider:
Setting a yearly revenue goal for your business is a big step towards financial stability. You now know how much revenue you need to generate each year in order to cover your expenses, make a healthy profit, and support your lifestyle.
But a goal isn’t worth much without an actionable plan to achieve it. So if you haven't already, go ahead and enter your new yearly revenue goal into your Harpoon account. You can do so by clicking the yearly goal amount link near the top of Harpoon's Schedule.
Next we'll focus on Rule #2: Planning Your Revenue. We'll walk through how to work backwards from your yearly goal and break up your year into manageable, bite-sized pieces as you plan out your monthly revenue and projects.
But for now a hearty congratulations from Team Harpoon on taking the time and effort to set a meaningful, yearly revenue goal! It's one of the most valuable pieces of data you can have for your business.
Disclaimer: Harpoon and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.
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