I wanted to share some thoughts with you that might be helpful when determine what to project for 2013 sales. I am applying this to my own business, and thought some of you might like this strategy for yourself.
Overall concept – Treat your revenue and time budget the same, and consider all new projects as extra, this way the unknown seems less risky. Extra time for extra money comes at the end of the day, after you’ve worked on existing tasks that are tied to your base revenue stream.
Concept in action – Let’s say you’re schedule is 8 hours per day, 9-5. You might budget 2 hours each day for admin/business development, which leaves 6 sellable hours per day. If you’re a freelancer, consultant, or otherwise bill your services hourly, you know it’s important to distinguish sellable hours and non-sellable hours. If you aim to double your revenue by the end of 2013, then divide the remaining 6 hours each day in half between current projects and new projects.
This is how my schedule looks (M-H):
8-9: Admin/Business Development
9-11: Client #1 (main client)
11-12: Lunch break/meetings
12-2: Current projects (all other clients)
2-3: Admin/Business Development
3-5: New projects/available (extra time to earn extra money)
*Tip: Keep the extra time spot at the end of the day so if you need to quit early, you already have your money-making work done.
If you don’t have clients and just run a monetized blog or website, it might look like this:
8-9: Admin/Business Development
9-11: Post a new blog, prep the next day’s blog (work 1 day ahead)
11-12: Lunch break/meetings
12-1: Engage and interact with your audience (schedule social media tweets in advance, provide an online class, launch a contest)
1-2: Admin/Business Development
2-5: New projects (extra time to earn extra $) – ebooks, guest blogging, open an Etsy shop, write magazine articles, etc.
Admin/Business Development is time to check emails, review to-do lists, project updates, accounting, record keeping, as well as your own marketing, advertising, sales, and PR tasks. I like to divide these up throughout the week so that each day is a little different.
Current projects are the tasks you need to do to continue earning the base income you already expect (and can realistically project over the next year).
New projects are the tasks you need to do to increase revenue above the base line; however, the sales projections are unknown. So, this revenue is considered extra, as well as the time (that’s why it’s at the end of the day). After a year of monitoring this “extra” income, you can make a realistic projection of sales for the following year.
Another way to look at this – Let’s say you’ve been in business for a year or more. Based on your 2012 numbers, you can make a realistic projection of what 2013 might look like if you kept doing the same thing. You want to increase revenue with these new projects in 2013, but it’s nearly impossible to make realistic sales projections, and thus, difficult to budget your time for these projects. So don’t put them in the budget at all, just consider them purely extra. Yes, they will require a small time and monetary investment, but you can expect to at least break even (need to do a break even analysis), and you hope to make a profit, but it’s all going to be extra. That takes the pressure off of you to meet some sales goal you pulled out of a hat. Focus less on that, and more on the known factor in the equation.
Here the concept, by the numbers –
Current sales for 2012 = $1200/month
Target sales for 2013 = $2400/month
–50% growth from new projects
–50% maintained from current projects
So…your time budget should mirror the target sales goal…
–50% of time for new projects (to generate extra revenue)
–50% of time for current projects (to maintain existing sales)
Here’s how you explain it in your business model – It’s hard to make realistic sales projections for products and services you’ve never offered before. The best practice is set a goal and follow a success plan that takes you from where we you are now to where you are headed. Let’s say you’re just starting out and you don’t have any sales to base your numbers off of. In that situation, everything is an unknown. My advice is to prioritize your products and services by which will product the most consistent (and highest) income stream, and limit this to one or two main projects. Any additional profits from new projects will be purely extra revenue, and will continue to fuel the growth and success your company all year long.
You’ll also need to determine a profit margin using a baseline income level. If you’re just starting out, I’d suggest a minimum of $200 per month in the beginning, with a steady increase every 3 months. By the end of one year, you might project a monthly income of $800 or more. The minimum profit margin should be 50%, and you want to strive for much more than that; however, depending on your start-up costs and operating costs, it may take more than a year to even make a profit. With my business, I have very little operating costs because I work at home and all I really need is a laptop, basic office supplies and software, and an internet connection, so my target profit margin is 85%. Include something in your business plan like this – Once profitable, we expect to reach a 75% or better profit margin; or Our current profit margin is 50%, and we anticipate a 75% profit margin by the end of 2013.
One last note for consideration – Be honest with yourself about what you’re willing (and able) to do to reach your goals. What are you really willing to do to make the money you need? What you’re willing to do might be different from what you’re able to do, so think about that as well. It’s great to set the goal, but it only becomes attainable when you commit to a plan of action.
Let me know if you have any questions, and I’d love to know what other ideas you might have in mind. Did this spark your motivation today?