“I don’t know what I am going to make.” I hear this statement all the time, and when your business is fairly new, I get it. But even from the very start, you should understand your capacity and availability to predict your revenue.  Whether you are a business or a service, you should be able to figure out how much you can make in a given time and create a path to get there.

 

 

It is so important that you figure out a predictable revenue at every phase of growth. Using these numbers can help you make the best business decisions regarding whether it is time to scale. The first thing you have to do is get your pricing right. If you need a pricing formula that will help you price any product or service for profit, you can find it in this blog: How Do You Calculate Selling Price? | Entre Money Coach .

 

Once your pricing is where you need it to be, we can talk about your capacity to make products and services for predictable revenue. I’m going to use a recent example, a client of mine who is starting a coffee roasting business.  We calculated his pricing based on operations, cost of the beans, labor, packaging, and shipping. We also figured out both a wholesale and a retail price for his products, because part of his model is to be on consignment in small local stores.  Here’s how we went from pricing to predicting monthly revenue:

 

 

 

 

  1. Capacity and Availability

 

Roasting coffee takes a certain amount of time per batch and based on the roasts and origins times can vary. But we averaged the time it takes to roast a batch, and the number of bags of product he can make in each roast cycle. That number alone will limit his capacity to make more than a specific amount of product each day. 

 

So, based on roasting time and resting time before packaging, we calculated the maximum amount of product that can be made per day, and then per week.  The cool part is that you can decide how much and how often you work. My client wanted to be part time to start, so the amount of product produced was also determined based on his availability and the number of hours he wanted to work.

 

 

 

 

  1. Number of items of each type to sell at each price

 

My client has two package sizes of roasted coffee beans right now, a 3oz size and a 12 oz size. How many of each size he makes, and sells, each week can help him predict his income. Some will be sold at wholesale, some at retail, with pricing at each size. Based on the number of wholesale and retail orders, plus the product he makes, without orders, to sell that week we can predict how much he will make each week, then month, then quarter. These numbers need to be reviewed at least every quarter.

 

For example: He sells 20 12 oz bags and 10 3 oz bags in a week.

 Ten 12 oz bags at $10.00 wholesale becomes $100.00 and ten 12 oz bags at $14.00 retail is $140.00.

Adding ten 3 oz bags at $2.50 wholesale is $25.00. With this mix of products, he will gross $265.00 this week on 30 total bags, mixed in size and price.

 

This is his “predictable” revenue. He can make more or less by selling more at a retail price instead of wholesale. This is just one small example of how knowing your “mix” of capacity. That and knowing your availability, audience and price can be brought together on paper. Doing this will allow you to predict how much money you will bring in.  I want to note that this isn’t actual sales at this point, but a very solid estimate.  You CAN predict your revenue, even as a new business.

 

 

 

Ready to plan your revenue for Q2 2021? Join me Saturday, March 13th for the three-hour Revenue and Profit Planning workshop! Visit https://entremoneycoach.kartra.com/page/quarterlyintensive for more information!

 

 

Every small business needs money pros. A money pro can be a bookkeeper, accountant, financial coach, or payroll service. A fractional Chief Financial Officer (CFO) is another type of money pro, and there are others, so this list is not all-inclusive. Not every business needs all the pros, but at a minimum, I advocate for every small business to have the services of a small business accountant for tax preparation every year. This post isn’t about finding your pro by getting a referral from someone you trust, which is always good practice.

Woman conducting an interview to find her money pro

This post is about making sure the pro you hire is a good fit to help you with your financial needs. Not all accountants have the same services. Some reporting styles will work well for some people more than others. You need a pro that will be an important part of your team for business compliance, planning, and growth. And it may end up being more than one pro.  You need to get what you need to meet your goals. 

 

 

 

 

FINDING OUT YOUR MONEY PROS

 

What support do I really need? This question actually covers two areas in my mind. What are the mechanical money things I need done, like running payroll or filing taxes, and the organizational and mindset support you need, like regular email reminders. There are a variety of services that can manage the mechanical. What are the financial things you don’t want to do? Or find too complicated? Find the pro that can do them. But make sure you also consider the personal touches needed to keep you on track. If you need a monthly phone call or email, request one. I know people who have weekly or bi-weekly meetings with their accountants. I know others that only need a letter with their completed quarterly return to sign and file by mail.

 

 

MONEY PROS AND YOUR COMFORTABLITIY

 

What level of reporting and understanding am I comfortable with? Let’s be honest, not everyone can read a financial report and understand it.  It’s definitely not in the zone of genius for most entrepreneurs. But what good is having the reports if you can’t use them? If someone just generates a report can you use it for projections and growth decisions? Perhaps for you it would be better to have quarterly in person (or virtual) meetings to review the numbers and understand what they mean for you. I have several quarterly planning clients because their accountants only do reporting for compliance. So, they work with me to do planning and projections. Get the pro or combination of pros that makes you very comfortable using the data to drive your decisions.

 

 

 

WHY YOU SHOULD HIRE A MONEY PRO

 

The phrase,Just because you ‘can’ doesn’t mean you ‘should’’ includes financial matters.  Are you still running payroll when you should have handed that off already? Struggling with your taxes again because you don’t want to pay for help? Having money pros can also reduce the potential mistakes that can cost your business. Having a bookkeeper, accountant, payroll service, CFO or coach for planning and growth are all pros that can help you avoid costly mistakes. Tax mistakes can have penalties and interest costs. Not withholding the right amount of money from your employee’s checks can also have penalties. Just like not having projections and growth planning each quarter can affect your profit margins and goals.  Keeping your books inconsistently can also cause a financial crunch, and you can miss indicators that business decisions need to be changed.  As soon as you can, get professional support.

 

 

 

FREQUENCY

 

Finally, how often do I need to see my pro? For many of us an annual checkup by a physician or medical practitioner is on the calendar for our health. For others there are weekly appointments to the chiropractor or regular visits with a specialist. Approach your financial pros the same way. What are your goals? You will likely need to see more people more frequently if there is an issue, less if you have a good management practice in place.

 

 

AUTHOR’S NOTE:

 

Don’t be afraid to just book a session with a pro for an hour if you need one. Go get that consultation and have your questions answered if you need it.  Thinking that you must retain a money pro for every week, or every month can prevent people from getting the support they need. These pros work for you and need to be a good fit for your personality, business culture, and financial needs.