How to Project your Business Income

If you own a business you will need to frequently project your income. You should always know how much money is coming in or when to expect revenue. Many people do not have a lot of cash flow so this is imperative for you to do. The business that stay in operations pay attention to its cash flow. Now if you are not a big business, you most likely do not have large contracts or revenue coming in periodically. As a small business owner, there are things you can do to project your income for current products or new products of services you are looking to sell in the future. 

1.) Figure out how much money you will like to make for the year, next 6 months or on a monthly basis. 

Which ever you prefer to work with. Many people do a yearly plan when starting then break it down to smaller goals, rather quarterly, monthly, bi weekly etc. For example: If you will like to make $100,000 in the next year that is about 8,000 a month which is about 2,000 a week. 

2.) You will then need a product or service. Some business owners may launch a new product every quarter, others have service packages with different pricing tiers that they promote daily.

3.)  Whatever you have, determine the price ( using a price evaluation technique) and how many items you will need to sell to reach your goal. For example: You product may be a book. You want to make about $8,000 a month in sales. After you determine your price, divide that by your desire income, in this case it's $8,000 and that will give you the a total amount of books you will need. So for the sake of the example, the book price is $30.00. Which means I will need to sale about 267 books a month to reach my income goal. 

Remember: 

The is income not Profit. If your books cost $5 each to order you will not take home $8,000.

Income $8,000 ($5 x 267 books)

Less Cost of goods sold (Book purchased) $1,335 ( $5 x 267 books)

Equal Gross Profit $6,665

If you will like to Take home about 8,000 profit it will look like this:

Income 10,050 ( 350 x 30 books)

Less Cost of goods sold (Book purchased) $1,750 ( $5 x 350 books)

Equal Gross Profit $8,750

Now that the numbers are out the way. You have to have the budget to buy the Cost of goods sold and you have to create your daily strategy for marketing and promoting this product in order to make not only your return on investment but also your desired monthly income. Remember, your numbers can vary. This is just a projection to help you increase your income and develop a strategy to me your yearly goals.


If you will like additional information on structuring and managing your business check out this accounting checklist. Download it now and discover the major keys to managing a business.