The Magic Numbers in Business

Businessman at Desk --- Image by © Radius Images/Corbis

What income forecast did you set for your business this year? If you are thinking of starting a business or have just started, there are magic numbers in business that you simply have to be aware of and work with.

Many of us are guilty of using Magic Numbers in our business.  You set your short and long term goals and find some arbitrary revenue figures to support your goals. More often than not, your current business model or product pricing cannot support the forecast and then poof!! That goal is up in the air.

Here are some tips to help you set and achieve your revenue goals in 2014:

Evaluate Your Products or Services

How many products do you have to sell to achieve your revenue plan? If you sell your services at £20 per person and you want to earn £50,000 per annum, you will have to sell 2,500 of that service in a year. Does that sound feasible?  If it doesn’t, you will need to a change a few things within your business.

The Price

product price

If your product is £1 a piece, you will need to shift volumes to make good sales. Let’s look at Primark store.  The only reason they rent such huge floor space is because they pile it high and sell it cheap. This is their business model and it works for the. People will come into the store to make purchases all day everyday.  They have to be able to shift a high volume of sales every day to cover their business expenses and make a profit.  If you sell low costs products, you have to do the same to balance your books. Otherwise, you change the price, quality or positioning of your product/service.

Your Time

Your business might not afford you the time to go round selling your services to every individual that needs it, especially for service providers.  If you are a solo entrepreneur, you will need to develop extra tentacles to meet the demands of your business and reach your revenue goals.  Your extra tentacles could be grouping your target market together to provide your services. There are those who will prefer the one to one service, but at least it will be at a level you can control and manage with no negative impact on revenue.

Stressed businessman entrepreneur

Your Business Model

Can your current business model accommodate the surge of customers you need to reach your revenue target for the year? You might need to upgrade your processes and systems to accommodate the expected sales.  If most of your processes are done manually, it might be time to automate some if not all of them.  You might need to delegate and outsource some of your tasks to others. This helps you can concentrate on the most important aspects of growing your business.


You may need to work backwards on how you can achieve your goals.  If your business sells products for £7.50 a piece, how many can you realistically sell using your current business model?  You might be able to sell 100 pieces a month, which would generate £750.  That figure over 12 months is £9,000 a year.  That is a far cry from the £50,000 you want to reach in a year.

With the basics of your annual sales forecast under your belt, you need to get to work and see how you can sell £50,000/7.50 = Approximately 6,666 pieces of your product per annum.  You might need to collaborate with other to achieve your goals. Take a step-by-step approach; your goal might need to change to £30,000 then £50,000 then increments of 50% over the next 5 years or more.

If you believe that your target market have needs and you can work hard to be the solution, then you can achieve your goal.

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.

Leave a Reply