For small business owners, one sad truth is revenue isn’t constant especially at the beginning. This month your revenue is up, the next month it is down, the following month it goes further down and on the fourth month, it is a combination of 2 of the previous month’s revenue.
This shows how tough and uncertain entrepreneurship can be. You can’t plan or project well with uncertain revenues.
If you currently face the unstable revenue challenge in your business, I will offer a few practical steps on how to fix it. Putting this into play in your business will most likely see you hitting your revenue goals and surpassing it.
Ok, let’ get right into it. The first thing you need to do is:
- Have the right pricing strategy
You don’t set a certain price because that is what your competitors have set. Your prices should consider your own cost of production, your business expenses, cost of delivery and other operational expenses. Your price should be set in such a way that after removing all of these costs, you still have a reasonable amount in profit. Always try to sell with a profit. Your competition should not determine your pricing.
- Set your revenue goals for the month
Now that you’ve gotten your pricing strategy right, your next step should be to determine how much you want the business to make in the next month.
Let’s say your items cost N7,500 and you want your business to make N200,000 in a month, that means you’ll need to sell about 26 items in that particular month to hit your revenue goal.
What I mean is know the amount of items you need to sell at a particular price in order to hit your revenue goal for that month.
Another example: Let’s say you need to hit 1 Million Naira this month and your items cost N25,000, how many items will you need to sell in order to hit your revenue goal?
The formula is to divide your revenue goal by the cost of your item (Revenue goal /cost if item). In this case, it will be 1,000,000/25,000 which is 40 items.
That means you need to sell for items that month in order to hit your revenue goal of N1, 000,000 (one million naira per month.
- Market to only your target customers knowing that just 1-3% of them will convert
Now let me tell you a little secret. If you sell your business to 100 people, how many of them do you think will buy from you? Between 1% to 3%.
This means if you want 40 people to buy from your business, you need to reach 4,000 of the most qualified prospects that month.
Now how do you go about reaching this people? This leads me to the next point.
- Setup a sales/landing page and run targeted advertising to your offer
Setting up a sales page or landing page and running targeted advertising to it means that only people who are interested in your product or service will see them. These are the ones who are most interested in buying from you.
I can help you setup a sales page or landing page for your business and run targeted advertising to it.
If you need help with that, contact me.
I hope you’ve now learnt how to set an achievable revenue goal for your business? What is your new sales target for next month?
If you have any further questions, leave it in the comments below. I will be glad to answer them.
Muyiwa is a New Media Expert, Entrepreneur & Business Strategist . He writes, speaks & advises Public figures, SMES & Corporate Organizations on Branding, Sales, Marketing, Entrepreneurship & Growth.
A personal development enthusiast, he is the Founder of theGrind Club where he writes its weekly newsletter & hosts its podcast.
Connect with him across social media @MuyiwaLagos