What Determines Your Revenue Potential?
So first, let's, look at what determines your revenue potential, and there are really six factors that impact your revenue. I'm going talk about all six of these, and then we're going to actually start to go through some exercises that you're going to start to crunch some numbers and see where you're at for this year. So the six factors that impact your revenue are your time, as in the amount of time that you spend on your business, your price point, how much your products are because his desert we mentioned it's a lot of four dollars cards, right your revenue stream. So where you selling and not just, you know, am I felling retail or wholesale, but certain revenue streams take longer to break into? I have a higher price point product, and I was able to grow much faster selling wholesale it's taken me a long time to grow my online retail business because my price point is not impulse the size of your audience. So one of the things that I want to do here is help you understand how to cl...
aim your own audience base so that you're not at the whim of whoever happens to run to your neo stumble upon your etc shop, then your promotion schedule, what are you actually doing to make contact with your audience? On a regular basis because these four factors are really important but if you don't do anything when your audience if you never sell to them that's really gonna limit your revenue potential tiffany's smiling because I know she's really bad it e mailing her list we're going to talk about kind of setting that promotional schedule and then finally your budget and your budget can be zero that's okay? But we're going to talk about how your budget can impact and help you grow faster if that's your goal so as an artist designer maker time impacts your revenue in two ways the time available to produce products to sell and in the time available for mark king and I look at marketing as lead generation customer acquisition and sales so the things that are actually driving your revenue and these two things combined I call your revenue generating activities the time spent on these is what impacts your revenue and we're going to run some numbers after we get through these six factors we're going to run some numbers to actually figure out what this looks like for your business now your price point affects your revenue by determining how much product you have to produce determining how many sales you have to make to reach a specific income goal and then your price point could also impact your revenue because it can determine how long it takes customers to decide to make a purchase so as I mentioned, my price point is higher I do not have an impulse buy, so that means that certain markets for me that was online, it just takes longer to get my customers to commit to a sale. Stewart my stores that I felt you were already kind of primed for that price point, it was a little bit easier so some your price point may determine what revenue streams make the most sense for your business when you're starting out. And this is just a really good example that I actually pulled from our raise your perceived value increase your prices class where you can see you know if you have a sales goal of one hundred thousand dollars if you're selling at sixty dollars, you're selling one hundred twenty dollars that's a huge difference in the amount of product that you can make. I don't know what that is divided by four desert but it's a lot, so that definitely impacts the amount of work that you have to d'oh. So then where you sell your revenue streams affects your revenue by again and determining how much product you have to produce because if you're selling wholesale versus retail it's a different amount of product, then determining how many sales you need to make to reach a specific goal so here's the thing we know that it people wholesale we have to produce more product because we're selling it at that wholesale price point, but if you sell wholesale, you have to make far less sales because you're selling at quantity so far, less sales means far less people you have to convert into paying customers, which is what makes wholesale so powerful, and then it impacts the type of marketing activities you need to do in order to reach your customers. Wholesale customers are easy to find. You can get a list of stores for any city in any place in the world, and you can send them a postcard an email you can call them that's very different marketing than if you're trying to grow your business online there's no good or bad here, but it impacts your revenue potential then the size of your audience affects your revenue by determining first of all, how much time you need to commit toe audience growth versus direct selling. So when I think about the marketing air to be is that I do in my business, I'm always asking myself where I need to be focused. Do we need to be growing my audience, whether that's, my list or my wholesale stores or my whole sale prospects or should my energy we put on selling to my existing list, sending calls to action to me email list bending out catalogs to my existing wholesale accounts and so the size of your audience we'll determine really kind of what your revenue potential is and where you need to spend that marketing energy and I can also determine how many sales you need to make. So how many people do you have to convert to hit your revenue goals? And again it impacts the types of marketing activities you need to dio so I think of your audience as a list of people you can directly contact who might be willing to buy from you that's your email list you can't directly contact your social media followers so it's your email list just and it's your store it's, your store prospect list and your current store list so those in the audience is they really want you guys to focus on because those are also the more controllable audiences and that and then we're going to figure out if we need to spend more of our time on audience growth we're actually selling to our audience making an offer saying here's a thing I think you should buy now your promotion schedule effects to revenue because in order to generate revenue, you need to make an offer to your audience with actually where I see a lot of makers fall short they're like, ok, I set up my store over here now I've got my social media list over here and nowhere in the middle are they saying, hey go here by this and some of that is because social media doesn't always converted a very high percentage were to talk about this that's, why I actually go social media to mailing list to that, but still, somewhere in those steps, you have to make an offer, you have to give a call to action. If you're not doing that isn't matter how big your list is, and then the more frequently you can make a strong offer without fatiguing your audience, the more revenue you can generate. This is why we did that whole class on product line expansion, because when you have new products, that's a really great way to reach out to your audience without fatiguing them. If every week you e mailed your list and said by the same thing by the same thing by this same thing off course, there going on subscribe, who wants to hear that? But if every couple of weeks you're like, hey, look at this cool new thing hey, look at this cool new thing, then that's exciting that's, a less likely to fatigued them. So ways of making an offer to your audience, launching a new product or collection, running a sale in your online store, sending a postcard or line sheet to us to a store with a called action, so go to my web. Email me your order, cost action or really important you have to tell people what to dio exhibiting at a trade show would be a way of making an offer. You're there the persons there, you're saying hey buy from me, calling her, emailing an existing retailer for a re order or something like exhibiting at a retail show. Same thing I'm here, you're here hey buy for me so their ways you could make it off for that's your promotional schedule. Last factor here your budget affects your revenue by allowing you to accelerate growth by other reaching out to new audiences to grow your list, maybe that's paying to market to grow your email list or it's paying to go to a trade show where you pick up new leads and then I'll let you make better offers to your existing audience. So producing, you know, a really beautiful catalog that's going to entice your wholesale customers to buy in a way that you're really crappy looking line sheet that you put it on your computer? Maybe not that's how your budget impacts that. All right? So when we take these six factors together, your time, your price point, your revenue streams the size of your audience, your promotion schedule and your budget, we can use thes six factors to calculate your income potential for the coming year.