Today, I want to share a recent experience I had with one of my incredible 1:1 Empowered CEO clients, and how we turned her desire to pocket an extra 5k into a concrete, achievable plan.
My client had this ambitious goal of adding $5,000 to her pocket, but here’s the kicker—like many others, she had no idea what kind of revenue she needed to make that happen. (Cue the light bulb moment!)
Here’s EXACTLY what we did to make this goal of hers a reality…
Step 1: Revenue Reality Check
The first thing I did was help her determine what percentage of revenue she should be allocating to her own pay. In her case, it was 20%. Once we had that magic number, the next step was a breeze.
Step 2: Reverse Engineering Magic
We did a little reverse engineering dance, multiplying that 20% by an unknown factor (let’s call it X) to hit her $5,000 target. Quick tip: To calculate X, just punch in 5,000 divided by 0.2 in your trusty calculator. Voila! The result? $25,000 of monthly revenue needed to make her dream a reality.
Surprise, surprise! This number caught her off guard, and she couldn’t quite wrap her head around earning that much revenue every month.
Step 3: Ideal Expense Ratio Chat
After that reality check, we dove into a discussion about what her business would look like if she operated closer to the “ideal expense ratio.” For her size business, the sweet spot was taking home 50% of revenue as profit (according to the Profit First strategy). This meant her monthly sales goal could be slashed in half to $10,000.
Step 4: Finding Your Comfort Zone
Next up, we figured out the owners’ compensation rate she could comfortably operate at. By analyzing her expenses and income, we discovered that she could easily hit that 50% mark if she curbed spending on items that weren’t delivering a return on investment (ROI).
Cue sigh of relief! Earning $10,000 a month suddenly seemed more achievable, and she realized her business wouldn’t just survive—it would thrive.
Step 5: Turning Dreams into Dollars
Armed with this newfound knowledge, we crafted a plan based on numbers to turn that $10,000 (and beyond) revenue figure into a reality. The moral of the story? Once you understand the breakdown of your revenue—expenses, owners’ pay, taxes—you can create a solid plan to scale and turn your vision into reality.
So, here’s to dreaming big, setting goals, and turning those dreams into sweet, sweet dollars.
Cheers to profit!