What is 'enough' annual revenue for you and your business?
The amount of annual revenue your company is generating is of the utmost importance in terms of enabling you to meet your personal and business goals and increasing its market value. But what constitutes an annual revenue that is ‘enough’? Evidently, this depends largely on your business and your individual needs as a business owner. This article will help you to start the process of deciding what revenue is ‘enough’ for you.
What should my annual revenue be?
Like many of the questions I ask my clients, the answer to this question is largely subjective, and involves many different variables. I should also make clear that a large annual revenue is not the only criteria involved in deciding what makes a good business. This is why my tool Value Builder, which gives insights to help you make your business stronger, asks various different questions revolving round eight different subheadings, with monetary value making up just one of the eight segments.
However, turnover will always be a key and very easily understandable barometer of a business’s worth, therefore Value Builder poses the following question:
‘What was your company’s annual revenue last year’?
- Less than £100,000
- £100,000 – £499,999
- £500,000 – £999,999
- £1,000,000 – £2,999,999
- £3,000,000 – £4,999,999
- £5,000,000 – £9,999,999
- £10,000,000 – £19,999,999
- £20,000,000+
As you can see, there are vast variations within this range; however, what constitutes a ‘good’ answer is not a simple matter. Take this example:
Luke runs a local handcrafted soap business. Luke is a house-dad and runs this business in his spare time, making the soaps in the evenings, largely as a hobby. Luke generally sells his soaps at local village fairs. He has a turnover of less than £100,000, however he is not the main breadwinner for his family and his business is only a part-time venture, which gives him immense personal satisfaction and pays for a long haul holiday and some ‘nice to have’ extras for the family.
Lilia, on the other hand, runs a software company with a turnover of over £5,000,000. Lilia’s competitors have a much higher turnover than her, and they are dominating the market. Furthermore, Lilia’s profits are largely redirected to investors in the company and there is barely enough money left over to reinvest to develop new products.
Despite Lilia’s company being more financially successful on the surface, arguably Luke’s company is the company that is generating ‘enough’ annual revenue. Working out what is ‘enough’ annual revenue for your business can be hard; that’s why I am offering free Value Builder reports and analysis to businesses in Kent, Sussex and Surrey – have a look at the details at the end of this article to find out more.
The one-pound company epidemic
The recent rise of companies sold for only one pound illustrates my point further: regardless of how successful, big or famous your company is, most still need to be striving to increase revenue and profitability.
- Homebase: Earlier this year, Homebase was sold for £1 to Hilco Capital by the Australian company Wesfarmers. Wesfarmers reached the following conclusion: ‘… the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround’.
They decided that the opportunity and risks associated with the turnaround did not justify the additional capital and management required. - BHS was also sold for £1 in 2015, as it failed to generate enough revenue.
What should I do to avoid this fate?
When I address this situation with my clients, I get them to sit down and make a list of the changes – both financially and personally – that need to happen for them to live the life they want, supported by their business. This might mean delegating more within the business to create more free time with their family, or implementing strategies to make their business more profitable. No one-size-fits-all plan can be made, as all businesses and business owners are different and subject to different market forces, personal needs and external variables.
In addition, different businesses have different capabilities. Some have different demographics and scalabilities that cannot be escaped, therefore the emphasis must be on getting the most from your business based on your targets and goals.
What I do stress is that it is not always profitable to try to increase your revenue by just seeking to sell more of your product. This is advantageous to some businesses and catastrophic for others. What’s the solution for your business? I can’t know that without understanding all the variables, including your personal goals. But together we can get some useful insights through the Value Builder tool and analysis, which I offer free of charge to businesses within my catchment area (see below).
My clients benefit from a whole range of supporting materials to help them in all areas of their business*.
If you’d like to know more about the business areas in which I can help you, call 01732 453 464.
Value Builder exclusive offer
Value Builder is an extraordinarily powerful tool to give business owners the insights they need to meet their business and personal goals, so I am personally committed to making it available to entrepreneurs in Kent, Sussex and Surrey, in the area indicated in the map.
Value Builder normally costs business owners £500. However, I am delighted to offer it to selected businesses free of charge – and I am also pleased to offer the follow up 90-minute 121 consultation to go through your results at my expense.
Why? Well, I want businesses to have the very best chance to grow and develop, delivering the results business owners and their families deserve.
Secondly, I want to see businesses thrive and recruit additional team members to further grow the business and help to boost the local economy.
The full list of towns where I can provide this service is below, but if you don’t see your location, give me a call or drop me an email I will let you know if I can help you. If I can’t, I’ll put you in touch with one of my colleagues who helps businesses in your area.
To apply for your FREE Value Builder report and business strategy review
Call 01732 453 464
Or email julianweekes@actioncoach.com
I help business owners in the following towns:
Brighton & Hove |
Hailsham |
Lingfield |
Seaford |
Bromley |
Hastings |
Maidstone |
Sevenoaks |
Cranbrook |
Haywards Heath |
Newhaven |
Sittingbourne |
Crawley |
Heathfield |
Orpington |
Tenterden |
Crowborough |
Hildenborough |
Oxted |
Tonbridge |
Dorking |
Horam |
Paddock Wood |
Tunbridge Wells |
Eastbourne |
Horley |
Redhill |
Uckfield |
East Grinstead |
Horsham |
Robertsbridge |
Wadhurst |
Edenbridge |
Kings Hill |
Rotherfield |
Worthing |
Goudhurst |
Lewes |
Rye |
Don’t see your location in the list? Drop me a line and I’ll let you know if I can help you – or put you in touch with one who my colleagues who works with business owners in your area.
*My clients benefit from supporting material and coaching in the following business areas:
Sales & marketing |
Lead generation |
Sales process |
Business planning |
Time management |
Finance, understanding the numbers |
USP & POD (Unique Selling Point and Points Of Difference) |
Systems |
Team / Team dynamics |
Recruitment / DISC / personality profiling |
Leadership |
Business growth |
Strategies for profit |
Succession planning |
Exit strategies |
Looking for support in one of these key business areas?
Call 01732 453 464
Or email julianweekes@actioncoach.com
