Every entrepreneur knows they need a plan to keep them focused on the right goals and activities. But did you know you need a revenue plan to guide the rest of your planning efforts?

A revenue plan helps you evaluate what you need to sell in order to generate your desired revenues. In my experience many small business owners just guess or keep their estimates in their mind. The problem with that is its easy to fool yourself and assume that the wrong offerings should get your attention.

Here’s why I help every one of my clients build a revenue plan to prepare for a new year:

1. Concrete Data

A revenue plan will give you concrete information about how much you need to sell of each of your offerings to generate your desired revenue goals. To set up an effective revenue plan you’ll want to evaluate how much of each product offering you need to sell each month to make your revenue goals.

This information will quickly help you see what marketing activities you need to focus on in order to generate those sales. I like to incorporate any live events, product launches or joint ventures I know are set during the year so I can see where the cash flow surges will be and can plan other marketing efforts for the other months.

2. Surfaces Profit Drains

When you keep your plans in your head it’s easy to rationalize poor decisions. When I helped Beth (a systems expert) with her Revenue Plan she quickly realized that over 80% of her content creation time was wrapped up in a product line that generated less than 10% of her overall revenue. Since the product did not lead to other purchases she knew that she had to drop the offering.

When you take the time to map out your revenues you will have a very clear picture of how much effort certain offerings require to generate revenue. Your revenue plan will become an essential tool for good decision making.

3. Play Out Possible Outcomes

One of the tricks I’ve learned when revenue planning is to play out different scenarios. For instance, let’s say you only have offerings that are $200 or less. You’d have to sell a lot of them to generate a six figure income. But if you add a $3000 offering as a “next step”, then you only have to sell 33.33 of them. When you use a Revenue Projection tool it allows you to play with possibilities and identify your higher payoff opportunities.

Your revenue plan should drive your goals, marketing plan and resource planning each year. By drilling down into each product line and how much you’ll need to sell you can use your time, money and energy much more effectively!

Now, go build your revenue plan to help you finish up your plan for the new year.

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