While revenue targets are an important aspect for any company, setting and achieving them often leads business owners down a stressful path.
“Am I setting enough revenue targets?”
“Are my targets too high — or too low?”
“How do I even begin to achieve my targets?”
These are some of the questions that might plague entrepreneurs when dealing with this part of their business. However, it doesn’t have to be a stressful event — if you know how to do it.
For example, my company’s mission is to impact the lives of one million business owners. But if I’m going to do that, I need to make sure I’m setting proper revenue targets. More importantly, revenue target per head.
Before setting targets, figure out revenue per head
To help you understand the importance of revenue targets, perform the following steps:
- Take your annual business revenue;
- Take your total number of employees;
- Divide annual revenue by employee number.
- And that should show your current revenue per head.
Now, hold on to that number because it’s going to make sense in just a second.
When reverse engineering and researching how multi-million and billion-dollar businesses operate, we have found that there is an average revenue per head that businesses have to hit in order to see profitability.
The general consensus is that a business should be operating at no less than $250K per head if you want to see an 8%-15% profitability increase.
However, if you want to make around 30-40% profits, then you should be operating at $500K per head.
KEEP IN MIND: Speaking from experience, pushing your team past $500K per head adds a lot of strain on your employees. As a business owner and leader, you want to stretch their rubber bands — but not so much that it breaks.
Now, this doesn’t mean every single employee needs to produce this amount of money. It’s just the average revenue each employee will help produce.
So, what do you do now?
Set your targets
Start by deciding how much profit you want to see in your business. From there, you will know where your revenue targets need to be.
For instance, if you want to see somewhere between a 15-25% profit margin, then your revenue target per head should fall within the $300-$350K range.
Reaching your revenue targets requires you and your team to generate massive amounts of action every day.
It requires your team to be in alignment with the mission of the company, as well as the goals for the month, quarter, and year.
Properly planning out your strategy is truly the key to ensuring your targets are met.
How do you do that?
- Learn everything you can;
- Surround yourself with the right people;
- Stop at nothing to make it happen.
Now, to learn how to better optimize your business efforts, schedule a discovery call for our upcoming 10X360.
Disclosure: This content is intended to be used for educational and informational purposes only. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment or business decision. Investment, real estate, and business involve great risk and there is no guarantee of performance or results.
We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.