Realistic Goals ≠ Small Goals

This is the Unbreakable Business newsletter - created just for founders and operators who want to build a company that won’t fall apart.

This issue is ALL ABOUT MATH.

Specifically, how to map your revenue goals to the actual activities that will get the job done.

What I’m reviewing in this newsletter is one of the most important skills a founder must have…and your ability to do this quickly and accurately will literally change your business for the better.

Enjoy!

⚡️ Realistic Goals ≠ Small Goals

If you’re a founder, you’ve DEFINITELY had someone try and “talk you down” in life. You know what I mean…someone tell you “come on, be realistic” when you explain the idea for your company and how it’ll grow.

To people like that, “realistic” is THEIR version of reality - frequently, it’s from people who are clinging to safety, not willing to bet on themselves, or are not in a position in life to take the risk of entrepreneurship.

Which is fine - this life ain’t for everyone (and I can’t stand people who try to shame people for having jobs instead of starting companies…yuck).

Anyhow…I’m here to talk about a different version of “being realistic”.

When I tell a founder to create realistic goals, it means that they need to have an actual plan in place - that maps all the way up to the activities that need to be performed in order to create the result.

Why? Because hope is a shitty strategy.

In this issue, I’ll teach you exactly how I do it using a pretty easy example - a sales funnel that’s driving revenue growth.

But it’s the best example to start with, because it’s one that affects every business, and mapping a revenue growth goal is usually the first time that an early stage founder will go through this exercise.

Alright, enough chit chat - here are the steps to nailing your next revenue growth target 💵

PS - if you want this in video format, check it out here:

🗺️ STEP 1: Map Revenue To Units

I know it’s fun to talk about growth in dollar signs.

“I want to grow my MRR by $20k next month”.

But the reality is this: sales drive revenue growth (in most cases). So the first thing you need to do is convert the revenue goal to a number of units that need to be sold in order to hit it.

If you only have one price point, it’s super simple to figure this out. But if you sell at a variety of price points (or do metered usage pricing or similar), you’re going to need to know your Average Revenue Per Account (ARPA).

So now that we have this, we can back into our unit sales required to hit our goal:

This should become your new language. When you stop setting goals in dollars and start setting them in units, you can quickly understand exactly how big of an undertaking it is - and also what might need to change in order to get the job done.

🙃 Step 2: Reverse The Funnel

Once you know your growth goal in units, it’s time to walk your way UP the sales funnel to figure out “what needs to be true” in order to get the sales you need.

To do this, you’ll need to write down all of the major steps in your funnel. I’ll give you an example:

The important thing to know here is that every funnel step has a conversion rate as well - which is the percentage of prospects at one step that proceed to the next step.

For instance, if you have 30 calls on the calendar but only 21 of them actually show up, your conversion rate on that step is 70%.

To reverse a funnel step, you divide by the conversion rate to figure out the goal for the step that comes before it. Not to worry if that sounds confusing - example incoming 😂 

Your objective here is to walk that all the way UP the funnel, so you know exactly what quantity of each step needs to be produced in order to hit the new goal.

At this point, you should have some goals for every single step of your sales funnel. And if you don’t love the numbers you’re seeing (or aren’t sure how to hit ‘em)…keep reading.

🛠️ Step 3: Tweak The Constraints

This is where the magic happens. Once you realize that this whole business is just a big ol’ math problem, your next step should be to play with the numbers.

Change some percentages around. Change your pricing. Tweak your goal. Just get a feel for how changed impact the effort required to drive results.

I’ll tell you this, though - in most cases, the biggest leverage points to tweak are your pricing and your win rate (from demos attended to deal closed).

If you want some examples of this, check out the video (and subscribe to my channel) - I walk through a few examples to show you exactly how it works:

I’ll be switching back to the “quick hits” format for next week, but really wanted to get this out there - because honestly, it’s one of the most important skills that a founder can have.

Until next week,

✌️ MV