Your Business Revenue: How Much You Need vs. Your Revenue Goals
What to consider as you work toward your revenue goals.
There’s a myth in entrepreneurship that we’re all supposed to be chasing endless growth—bigger revenue, bigger teams, bigger launches. We see people share their revenue numbers and feel a little envious.
But endless growth isn’t always the right answer. At some point, you have to ask yourself: What am I really working toward?
Solopreneurs are particularly vulnerable to hustle culture because we're in control of our own outcomes. Work harder, get more rewards... right?
But without some boundaries, we can burn out. That's why defining how much you "need" is so important. When you know how much you need to sustain your lifestyle, you can decide if you want to push beyond that - and, if so, how far you're willing to go.
You don’t have to grow just because you can
In the beginning, most solopreneurs have a goal to build a business that supports their life. Once they've moved beyond that point, growth starts to feel intoxicating. Maybe you're earning more than your previous corporate salary, or maybe you're starting to earn $10k per month. You start to wonder, "How much is possible?"
But you'll eventually hit a ceiling (at least, if you're doing any type of client work). You won't have enough hours in the day to keep growing.
You could raise your rates (which I highly encourage!), but you may eventually find that you have stretched the market to its limits. You could also subcontract your work, but now you're supervising other people, and it eats into your profits.
And maybe either of those is a viable path for you. If so, go for them - both have the potential to increase your revenue.
I am a freelance fintech writer for B2B tech companies. I charge more than most freelancers, so I don't think I can increase my rates much (if at all). And I have no interest in subcontracting my work. In some cases, my client agreements explicitly prohibit me from doing so.
If I want to increase my revenue, I'd have to take on more work. I can't write faster, so that means more hours.
If you're like me, you have to decide: Do I want to work more to earn more? Or is this "enough"?
Calculate your foundational revenue
When you think about your business's revenue, you should have two numbers in mind:
- Your foundational revenue — how much you need to sustain your lifestyle
- Your goal revenue — how much you'd like to earn
Your foundational revenue is different than the minimum revenuerevenue goals usually have you have to earn. We could all make lifestyle cutbacks if we had to. I have a "bare minimum" number in mind, but my foundational revenue is my target. Foundation revenue means I've built a sustainable business.
The formula is pretty simple:
- The amount of money you need to sustain your lifestyle
- Your monthly business expenses
- Those two combined = your foundational revenue
The amount you need to sustain your lifestyle includes expenses like your rent/mortgage, groceries, utilities — anything you pay for every month. For me, that includes expenses related to my kids, subscription services I pay for, and more.
My business expenses also include setting aside money every month for a rainy day. While that's technically not an expense, I consider it a necessary part of running my business. I also set aside money to "pay myself" when I'm on vacation and not earning money from clients.
If you're not consistently earning your foundational revenue every month, you'll want to work on that first. Think of it as a step toward your larger goal. Look at your current pricing, clients, and bandwidth, and see if you can make any changes in your business strategy to hit that foundation. Consistently earning your foundational revenue lifts a huge weight for solopreneurs, both financially and emotionally.
Reality check: I don't hit my foundational revenue number every month. The nature of my work means that there are always fluctuations. But I'm usually pretty close.
And because I set aside money in a savings account every month, I can draw from it during months when I don't hit my foundational revenue number. During the months when I earn more than my foundational revenue, I add extra to my savings account. I'm comfortable with this approach because I've basically "created" foundational revenue for myself by moving money in/out of savings.
Keep in mind that your foundational revenue may change as your lifestyle changes. If you buy a new house or have a baby, you may need to adjust your foundational revenue number.
What will you need to do to earn your goal revenue?
Once you've met your foundational revenue, you can turn your eye to your goal revenue.
I track short- and long-term revenue goals, thinking about what I'd like to earn this year compared to last year, and what I'd like to be earning within the next five years.
Short-term revenue goals usually have a clearer path. As you raise your rates, you might drop lower-paying clients. Or maybe you start selling a digital product that earns some extra money.
Long-term goal revenue requires some more thought. You'll want to consider:
- What will your revenue sources be, and are they different from your current revenue sources?
- What steps do you need to take to build that additional revenue?
- What will it require from you to complete those steps?
There's usually a tradeoff between your time, energy, and revenue goal.
For example, I've maxed out my bandwidth for client work. So to earn my revenue goals, I have turned to alternative revenue streams like digital products and courses. However, those things (right now) take a lot of time and don't earn a lot of income. I have to think about the trade-off of time compared to potential future revenue.
That's the calculus you'll need to consider as well — especially if your goal revenue requires a new revenue source. Nothing will happen overnight.
Re-balancing your time and money
If you're consistently earning more than your foundational revenue, you have another option to meet your revenue goal.
You could scale back on your current work until you're at your foundational level. Then use the extra time to work on building toward your goal revenue.
That means you'll earn less for a few months (or longer). If you've gotten used to the higher income, it will feel like you're scaling back on your lifestyle. But that's why knowing your foundational number is so important. You want to know the income you need to earn to feel comfortable; anything above that is a bonus.
Anna Burgess Yang
Keep your foundation in mind
Working toward your goal revenue can be rough, especially if progress is incremental.
One of my goals is to earn more from writing on platforms like Substack and Medium. But those things take time to build, and I have to write a lot of content. Even though I can see growth, I'm starting from a small number. I have to keep in mind that the revenue keeps increasing and that it will gain momentum over time.
But knowing my foundational revenue number helps, a lot. As long as I'm earning that number, I have options. If I'm feeling overworked or burned out, I know I can scale back and still sustain my lifestyle.
Your revenue goal is just that: a goal. And it's important to have revenue goals, but keep in mind that you're only one person. Growth looks different for you than for teams or large companies.
You have to understand what it would take to meet your revenue goal, and what trade-offs (if any) you're willing to make to get there.
Freelance pricing is hard to figure out, but I’ve created a free resource for fellow writers. It outlines my rates, how I think about pricing, and how my pricing has evolved over time.
