How Do I Predict Revenue?

03/13/23 • 11 min

Forecast On Purpose - Business Growth Advisory for Entrepreneurs

Objective today:
- Predict the revenue - Narrow the region of darkness instead of crossing fingers hoping to repeat
Concept:
- what are the building blocks behind we make money?
  - Number of Units x Revenue per Unit
    - How many will I sell?
    - What is the right price?
  - Common mechanisms
    - Product
    - Service
    - Subscription
- How does it change over time?
  - Seasonality
    - Q4 for consumer good always boosted by Black Friday & Cyber Monday sales
- Organic growth
  - Natural increase over previous year or month
- Driven growth
  - Ad spend
  - Sales efforts

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Objective today:
- Predict the revenue - Narrow the region of darkness instead of crossing fingers hoping to repeat
Concept:
- what are the building blocks behind we make money?
  - Number of Units x Revenue per Unit
    - How many will I sell?
    - What is the right price?
  - Common mechanisms
    - Product
    - Service
    - Subscription
- How does it change over time?
  - Seasonality
    - Q4 for consumer good always boosted by Black Friday & Cyber Monday sales
- Organic growth
  - Natural increase over previous year or month
- Driven growth
  - Ad spend
  - Sales efforts

Previous Episode

How Do I Build A Growth Plan?

How did the business start?
What problem is it solving in the world?
What are the current key decisions being considered?
Who are the decision makers?
How have revenue and expenses changed year over year?
What kind of seasonality does your business experience?
What are your current pricing methods and gross margins?
What are your current total fixed period costs per month?

Next Episode

How Do I Calculate Variable Costs?

Objective today:
- Unit economics - like individual Lego building blocks that make up the overall profitability picture
- Revenue per unit
- Any cost during making and selling
- Connected to gross margin.
-
- Every % is a penny of each $ available to cover overhead
- Concept:
- What makes it improve?
- Increase price
- Decrease variable expense
- Cost of product
- produce in bulk
- cut costs where customers don’t mind (value engineering)
- shipping
- negotiate better rates
- Offer free shipping above threshold
- advertising & commission
- Sell to existing audience
- Partner with other brands to sell to their customer
- Trade-offs
- Sometimes spending more advertising dollars or offering referral or sales commission can accelerate revenues to help cover overhead but decrease our gross margin %
- Key Question + Action
- **What is a unit for you?**
- **What costs do you incur with each creation and sale of every unit?**

Forecast On Purpose - Business Growth Advisory for Entrepreneurs - How Do I Predict Revenue?

Transcript

How do I predict my revenue and what can I do to stop guessing around how many dollars may be generated in sales this next month for my business. Most entrepreneurs don't have a clear and compelling roadmap for the future. Welcome to forecast on purpose, where we talk about how to define your purpose, build a growth plan and track progress along the way to make sure you stay on target.
The result is clarity, confidence, and peace of mind that you were on the right track. My name is Ben Co