Why set a yearly revenue goal?
At the core of Harpoon is the belief that setting goals for your business is the best way to guide you into making smart decisions that lead to growth and success.
As a freelancer or consultant setting business goals starts with setting your personal goals. Ideally the business you’re running will make you enough money to support your lifestyle. But how much money will that take?
First let’s figure out how much money you need to live your current lifestyle. And then we’ll talk a bit about your future lifestyle.
Your Current Lifestyle
Let’s take some inventory of your current 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.
But at Harpoon we like to get very 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.
We encourage you to take some time to think through all the categories of your personal and business life that you need to account for. Scribble them down on a piece of paper. Don’t worry about how much money is involved just yet. Everything from food and housing, to health insurance and savings; from office expenses and vacations, to clothing and retirement; brainstorm all the different categories of your personal and business life that you need to account for and jot them down.
Once you have a healthy list of categories you’re ready to start calculating the actual costs involved with those categories.
Your Yearly Revenue Goal
What we’re ultimately after here is a yearly revenue goal for your business. It’s the amount of money your business needs to make each year in order to support your lifestyle. To figure out that number you can use Harpoon’s Yearly Revenue Goal Calculator:
You’ll supply the details into the calculator for the different categories you listed above, and the end result is a yearly revenue goal total that represents your lifestyle. This is your big number. This is what you’re shooting for. This is your goal.
To help you use the calculator we’ve written a quick tutorial you'll want to check out:
Go through the tutorial, figure out your yearly revenue goal, plug it into your Harpoon Settings (the tutorial shows you how), and give yourself a big high five for caring enough to be specific about running a successful business. Your yearly revenue goal is the first step towards your business’s financial stability.
Your Future Lifestyle
Now let’s talk about your future. The yearly revenue goal you calculated above should be enough to cover the cost of your current lifestyle. That’s good. You’re starting with where you’re at. But what about your future lifestyle? Most of us have at least a general idea of things we’d like to do in our lives that we can’t quite afford to do just yet.
Take a moment to sit back in your chair, close your eyes, and imagine the lifestyle you’d like to be living a year from now; two years from now; five years from now. Don’t worry too much about what you think you can or can’t afford with your current income. Where do you see yourself living? What kind of vacations would you like to be taking each year? How much extra do you want to be setting aside for retirement? Do you picture yourself getting married, or starting a family, or maybe growing your existing family? Or do you have a desire to travel, running your business on the road as you explore different parts of the world? Maybe what you’re picturing is similar to your current lifestyle. Or maybe it’s quite ambitious. Either way is OK. The point is you have a clear picture of the lifestyle you want your business to eventually support.
This lifestyle is what the “future you” looks like. The lifestyle of “future you” is probably more expensive than your current lifestyle. The goal is to grow your business over time to eventually support the future you. But how long will that take? And how much will you need to grow your business each year to get there? Again, at Harpoon we like to get specific.
Use the Yearly Revenue Goal Calculator again, but this time add any new categories to your existing personal and business budgets that the “future you” needs. Also be sure to increase the amounts of your existing categories for the future you as needed. The end result will be your yearly revenue goal for the future.
Your Multi-Year Plan
The last thing you’ll want to determine is how much yearly growth your business will need in order to eventually accomplish your future yearly revenue goal. For that you can use a simple formula:
(Future Yearly Revenue Goal) - (Current Yearly Revenue Goal) = (Total Growth Needed)
(Total Growth Needed) ÷ (Number of Years) = (Yearly Growth)
For example, let’s say your current yearly revenue goal is $50,000. And your future yearly revenue goal is $65,000. The difference between the two is $15,000. This is the total growth your business needs in order to eventually support the lifestyle of the “future you.” Let’s say you’d like to give yourself 3 years to grow your business up to this level. You’d need a $5,000 increase in yearly growth to accomplish your future yearly revenue goal in 3 years.
Why is this important? Because you don’t want your business to be stagnant. You want it to grow, and more specifically you want it to grow with a purpose. In this case your purpose happens to be the lifestyle you envision yourself living three years from now.
So at the beginning of each year you’ll want to go into your Harpoon account and increase your yearly revenue goal by your yearly growth amount. In the example above that’d be a $5,000 increase each year. And then as each year progresses you’ll want to make the necessary changes to your business to foster the growth you want to see. That might require raising your rates from year to year. Or going after a higher caliber of clientele. The point is you’re making decisions for your business through the filter of not only the revenue goals you have for this year, but with a larger multi-year picture in mind.
To learn more about setting goals view the Revenue Goals support articles.