How Much Revenue Do You Need to Stay in Business?

by Don Smith

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I asked one of my clients the other day, “What's your number?”

She knew exactly what I meant.

“$2,500 a month would at least cover my bills. I wouldn't be happy with that long term, of course, but it would allow me to stay in business.” came the reply.

Setting Your First Revenue Goal

If you're starting a new business, a significant milestone is getting enough revenue going to cover all your bills so that you don't have to keep raiding your savings to stay afloat. Once you hit that number, your business is sustainable.

Getting over fear of spending money - invest in your business
One you get enough revenue to cover your bills, your business is sustainable.

Make Your Revenue Goal S.M.A.R.T.

Every so often, one of my potential clients will throw out a number like $100k a month as their target when they haven't sold a thing yet, and I just have to shake my head. Sorry, I am a business coach, but I'm not a miracle worker. That is a number you can hit if you're an existing established business with a team or have a huge chunk of cash to invest, but you're not going to hit that quickly as a brand new business owner.

If you want to achieve your goal, then make it SMART. Specific, Measurable, Achievable, Realistic, and Timely. Don't start with a goal that is ten years out or you'll quickly get discouraged.

Get Clear on Your Goals
Make your revenue goal achievable in the near term

When starting a business, the time frame is usually defined by how long you can afford to pay your bills before hitting your first revenue target. You can stretch it out as long as you are getting close to hitting your numbers, but there is a limit to how long any business can have negative cash flow before they have to do something else.

$2,500 a month was a realistic milestone target and one that I felt confident we could hit to at least cover her bills so that she could stay in business. Not only could we hit it, but we should be able to smash that one out of the ballpark in six months.

Breaking Your Revenue Down

I pulled up my calculator.

$2,500 / $85 per session = roughly 30 sessions a month.

“You'll need a session a day to make that happen at your current rate. With all the other things we have been talking about regarding ways to generate additional revenue, I'm confident we can get there.”

Now we had a baseline to work from, and our first revenue target to hit.

Embrace the AND to Succeed in Business

My client is in an intriguing business, combining Astrology with life coaching. When she first came to me, she said that her first love was Astrology, and had been doing that on the side as a hobby before she got laid off. Now she was thinking about doing life coaching because she enjoyed helping others as well and she knew it was a popular path.

One of the things that rang true to me was her comment that “You don't have to believe in Astrology to believe in good advice.”

I'm a bit of a skeptic, but the more I talk to her and read up on the subject, the more I think there might be something to this. My wife always tells me that she knows any time there is a full moon, it's going to be crazy in the nursing home, so we probably are affected by the moon. Astrology has been around for 4,000 years, and like most things that survive that long, there's probably some truth there.

I told her if she loves Astrology, we should keep that. Embracing the AND is one of the principles of successful businesses that the six-year research project team from Stanford reported in the book, “Built to Last: Successful Habits of Visionary Companies.”

Astrology + Life Coaching?

Embrace What Makes You Unique to Succeed in Business

There are tons of life coaches out there. I'm technically a certified life coach myself after taking Kain Ramsay's course, although my specialty is in business coaching.

I knew that bringing in her love of Astrology would make her stand out from the pack, so I encouraged her to embrace the genius of the and. Operating as The Healing Advice Oracle, she is already starting to get a steady stream of clients because she does things a little differently.

Usually, she starts with a birth chart reading where she helps people find their purpose. She also helps people figure out if the stars are aligning and the time is right to start a business, change careers, start or end a relationship, or if and where they should move.

Support a New Business Owner and Get a Fun and Helpful Reading

If you want to work with her and support her new business, shoot her a message on Facebook. It's interesting to get a read, and she over-delivers to the point we're working on cutting down the number of hours she spends on each client.

What is Your Number?

If you have ever considered going into business for yourself, have you thought about what your minimum number is? How much revenue would it take to cover your bills?

Realistically you will probably take a financial hit for the first year or two if you're working in a high paying corporate job, and you go out on your own. It simply takes time and money to build a business contrary to what all the gurus will tell you as they sell you their courses.

You can speed up the process significantly by hiring someone like me who has done it before, but no guru is going to snap their fingers and make you a bazillionaire. If you've been spending all your time dreaming about going out on your own, figure out what your minimum number is and work backward from there.

About the Author 

Don Smith

Happily married with five kids, Smith owns a technology company, is the founder of this site, has served on the board of directors for multiple companies, and loves playing soccer, hiking, and mentoring.

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