Any successful business owner will advise ‘you need a plan’; a business plan, a marketing plan & even a revenue plan. A revenue plan will be the foundation for your businesses other planning efforts. In its simplest form a revenue plan is, ‘what do I need to sell to generate the revenue desired for my business’? This isn’t solely an exercise for when you start your business, a revenue plan should be part of your annual planning & goal process. Large businesses have annual revenue plans as part of their overall business plan, but small businesses tend to ‘guess’ what their revenue might be, their plan ‘lives’ entirely in the business owners head or they forgo the entire process.
Like any of your other business plans, a revenue plan should have the ability to be viewed by others (paper or in electronic format) & be reviewed regularly.
Foundation for a marketing plan
A revenue plan will give you actual information about how much you need to sell to generate the revenue you want for the business. How much of your individual offerings (combination of products & services) do you need to sell each month & quarter to meet your annual revenue goal? Your revenue mix will help you develop the marketing plan that is needed to support the planned revenues. If this isn’t the first time you have developed a revenue plan for your business, review your prior marketing expenses & apply the scenario in the opposite direction. What marketing costs converted to the most leads & closed deals/sales? What products/offerings were sold from the leads? If you are spending on marketing that isn’t converting leads to closed sales, eliminate the expense & focus your efforts on other marketing options. Marketing & revenue planning go hand in hand & help you develop your next business move.
Time & effort to earning
A revenue plan can be used to determine the time, effort & costs associated with earning that revenue. It’s the old 80-20 rule, will 80% of your revenue come from 20% of your effort or vice versa? Are you spending 80% of your time to earn 20% of the businesses revenue? Once you have your plan mapped out, take a moment to review the time & costs associated with each product offering. Once you see the plan & costs on paper, a review of the options may reveal a need to revise or eliminate an offering that takes too much of your time. Your revenue plan is an essential part of your continuous decision-making process.
The best revenue plans take into consideration ‘what-if’ scenarios…What if you sell the more widgets with wheels? What if you sell more rubber widgets? What does the difference in revenue mix do to the overall gross revenue & expenses. Developing what-if scenarios can be used to determine where your greatest revenue opportunities lie & help you weed out the offerings that don’t bear the greatest benefit.
Your businesses revenue plan will be the foundation & driver of your annual marketing & resource goals. By reviewing the revenue scenarios, you can determine the best use of your time & resources. Talk to your accountant & trusted business advisor about developing a revenue plan.
If your accountant doesn’t offer revenue planning services we can help. You don’t even need to be in the same part of the US… we can work with you from anywhere. With real-time cloud accounting access, your accountant & trusted business advisor located anywhere in the world can help you operate, understand & grow your business rather than just adding up the numbers.