Why Creatives should project their revenue and how NOT SCARY it is.
We’re all about PROFIT + SERVE here at Reina + Co. We want creatives of all kinds, who want to use their skills and talents to serve be able to make money that provides for the lives they want to live. Whatever your most alive self, we want you to pursue that. Does that mean putting your kiddo in childcare? Maybe it’s retiring your partner so that he can join your business. Perhaps it’s taking 4 months out of the year and living in Paris. All that it totally possible. And a lot of the time, in order to live that life, you need money to make it all happen.
If you’ve ever considered yourself a free spirit, a true creative, and “not a numbers person,” but somebody who also has some lofty goals (that require money), I want to challenge you to stick with me because I’d love to convince you to try one thing (just once a year and a monthly check-in) can help you to do.
If you were to imagine your life a little bit more self actualized, a little bit “more,” and a little more like the ideal life you want to live, what would it look like?
What would you be doing in your daily life that would be different?
What decisions you’re making now would be a different decision if you had a little more wiggle room?
Are there any drastic changes you’d like see?
These changes are entirely possible. And if you’re anything like me, once you see the goal, you can put your intention and planning around making something happen. What currently is doesn’t have to be your permanent state of being. Let’s break the status quo so you can be the most you-y version of you!
The “Bad News”
In order to make that ideal life become a reality, we have to look at your numbers. BUT! I promise it doesn’t have to be scary.
Let’s Break It Down
To start, you just need to know about three key numbers in your business.
What you take home
This is your owner’s draw from your business. How much your business pays you. Many entrepreneurs mistake that your business is bring in as their own salary. While that’s a decision you can definitely make, it might hinder you from being able to make some critical decisions in your business.
I’d first recommend you look at your personal finances (and if you haven’t done this, grab the Survive and Thrive workbook to help you in this) to determine how much you need to take home. If your business is making good money, great then please pay yourself! If not, though, we want you to think of a way to work up to making the salary you desire and backing into it. For that, we look at the revenue (what you’re bringing in) and the expenses (what’s leaving).
What you’re bringing in
Your business should be making money by creating opportunities for sale. If you’re selling goods or services, you’ve hopefully got revenue coming in. Increasing this amount is the fastest way to achieve those dreams we talked about earlier.
Every opportunity that somebody can purchase something from you is an opportunity to increase your revenue.
We’ll talk a little more about how to get this to increase in a bit!
Even if you have zero expenses in your business, you should always be saving for taxes. Which is why not every penny from your revenue (what you’re bring in) can go toward your take home amount!
Your expenses could range from:
- Subscription memberships
- Tools you use
- Books you buy
- Trainings you invest in
- Team members
Whatever expenses you have will decrease your profit (but might be mighty helpful in increasing your productivity and ultimately having a high return on the investment!).
Projecting your Revenue and Setting Goals
Once you determine what your services and products are, think about how many of each you have to sell in order to hit your goal of revenue per month.
As an example, if you have a goal of making $5,000 per month and you’re a graphic designer who has a package that’s $2,500, you know you’ll need to sign just two clients rather than worrying about #allthethings so that everybody will sign up to work with you.
Or if you’re a subscription box creator and your goal is $10,000 per month, and your monthly box is $20, you know you’ll need 500 customers to buy the box.
Once you have a target, it’s much easier to anticipate what needs to happen. Unfortunately, what I see many creatives doing is getting anxious because they “don’t want to know” their numbers. Knowing your numbers actually means you’re empowered and can make better decisions!
If the same graphic designer hadn’t done her projection, she could be chasing after 5 projects instead of knowing and feeling confident in finding the two amazing clients she wants to work with.
And the same subscription box creator already had 450 people who were going to purchase, if she didn’t have the goal of 500, she might have felt like she needed to go out and find 250 more customers and overstress herself.
The greatness that is Projecting your revenue is that you get to set the boundaries and it actually gives your business a direction. By looking at the numbers, you get to decide what you focus your attention on and what projects does not warrant you spending time or money on.
Another way to look at this is, once you look at your number, you know what enough actually looks like and can pursue that steadfastly.
I have a tool that I share with my clients that I think would be helpful for your business. One of the seven tools I use in my business and have shared with countless others is the Financial Projection – Money Plan Template. If you’re ready to rock out this year and are tired of wasting time trying to figure out what to focus on, grab this set of Templates in the Set Better Goals Set!
I always avoided plotting out my yearly budget because I thought it might stifle my creativity and flexibility. But it turns out I just didn’t fully understand why doing a budget projection mattered. Now that I have used Reina’s method and template to build a budget for next year, I have a new sense of clarity and freedom. Even better, I finally have a plan! – Katie Williamsen, katiewilliamsen.com
Setting big-picture goals for my business is something I’ve never been good at. I’ve always thought of a new idea and ran with it, not thinking much about what it actually meant for my business. The templates inside of Set Better Goals make having an organized and profitable business possible for me. Heck, even creating financial projections for the upcoming year was fun! – Krista Miller, kristarae.co
Grab Your Financial Projection – Money Map Template + 6 Others that will help you organize and help you build a profitable business.