Revenue
--noun
1. the income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses.
2. the government department charged with the collection of such income.
3. revenues, the collective items or amounts of income of a person, a state, etc.
4. the return or yield from any kind of property, patent, service, etc.; income.
5. an amount of money regularly coming in.
6. a particular item or source of income.
Origin: 1375-1425; late ME < MF, n. use of fem. ptp. of revenir to return
People want to go into business for themselves for a variety of reasons. Some people I've talked to have this idea that they want the freedom that comes with working for yourself. Freedom? You have less freedom than any employee. You have suppliers, banks, employees, customers and a host of other people that you are accountable to. Others want the chance to set their own schedule (you'll end up working even more hours). And there are a whole group of intangibles, such as the satisfaction of being successful or the ability to help others improve their lives also.
But let's be honest. None of the rest is possible is you can't make a profit. After all, why bother to go to all of the work of building a business if you are not going to make a lot of money? And it is a lot of work.
Businesses run on numbers. Those of you who hate math are probably wondering if you can skip this section. No. Many business startups have failed because they did not take this step in the process seriously. A revenue analysis allows you to see if the idea that you have will make you the amount of money that you want or whether your idea needs to be reworked to achieve your goals. The revenue analysis is not a projection of what is possible to make, but a projection of what you will make and then committing to it.
Most people's dream is to become a Millionaire. There is nothing to prevent you from doing that. Thousands of people make the commitment and do it every year. On the other hand, your goal may to just make an extra $500 a month. That's great. The same principles apply, but since this course to built to assist those want to live on their own terms instead of someone else's, our target number should start at $100,000 a year in revenue.
To someone that is used to making $8 an hour, this figure may be somewhat daunting. However, it's not as hard as it sounds. Let's break it down. $100,000 is:
- $8,333 a month
- $2,080 a week (4 week month)
- $416 a day ( 5 day week)
There is the temptation to say at this point, '$416 a day is too much. I think I can do $200 a day though'. That approach will never make you truly successful. The good businessperson sets his goals and then keeps refining his business model until it meets his financial targets.
Let's look at some examples. The basic Revenue Analysis would look something like this. Lois is a music teacher that wants to make an extra $1000 a month. She has decided to charge $25 an hour to tutor students who want to learn how to play the piano. To achieve this, she would need to find 10 students who met with her once a week.
- Goal: $1,000 a month
- Rate: $25 an hour
- Hours: 10 hours a week
- Clients: 10 per week x 4 weeks