Minimum Viable Numbers
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Last week in the Society during our monthly MOVIE framework workshop, we were talking about Visibility and the idea of "knowing your numbers".
Each of us has a "minimum viable" number of leads that delivers the minimum viable sales, revenue, and profit for our business.
Most creators I work with haven't done this work yet to understand what their business needs are, then they wonder why their business isn't delivering the results they want from it.
Go figure...
So, today, let's look at what that number is for you so that you can gain more clarity and create a plan to hit - and exceed! - your minimum viable number.
Minimum Viable Revenue
We'll start at the end and work our way backward toward where we are now. We can't magically make $100,000 appear out of thin air, but we can take the first step. To know what that step is, we need to determine the outcome.
How much money do you want to pay yourself?
Let's use $100k/year as an example. If you are a company of one, your business needs to make more than $100k/year, to account for things like profit (10%) taxes (15%) and operating expenses (15%).
How much more? Well, if your salary is 60% of the total, then you need use this simple equation:
$100,000 x 1.6 = $166,667
Your business needs to have $166k in revenue in order to pay you $100k. Make sense?
If you have employees, multiply your average salary by 2.5 instead of 1.6, to account for the larger overhead.
Now, how do we make that much money?
Minimum Viable Sales
Your revenue comes from your sales. So, what do you sell? Do you sell high-ticket ($10,000+) projects?
If so, divide your average order value, say $10,000, into your minimum revenue number, $166,667.
$166,667 ➗ $10,000 = 16.667, or 17 sales.
Maybe you sell your time by the hour, at $50 per hour. How many hours do you need to sell to make $166,667? Use the same equation:
$166,667 ➗ $50 = 3,334 hours!
But, wait a minute? Is that even possible? 3,334 hours divided by 52 weeks means you'd have to work 64 hours per week, with no breaks for lunch!
A) it's highly unlikely that you'd be that booked, and b) you'd burn out after a few weeks. It's just not sustainable!
This is an awesome opportunity to look at the realities of your business and make some choices. Do you increase your prices? Hire others to do the work for you and take a cut?
You could charge $100 per hour, work 32 hours per week, and have plenty of time with your family and friends, for example.
The choice is yours.
If you sell $10 products, like an album or a book, you'd need to sell 16,667 books in a year to make that same amount of revenue.
You can see how important it is to do the math here so you know how many clients, projects, hours, or sales you need to hit your revenue goal for the year.
Minimum Viable Leads
Lastly, we need to know how many leads we need in order to get the sales that we need.
The goal, ultimately, is to become oversubscribed. That's when you have more demand for your products and services than you have capacity.
So if you can only support producing three feature films, like me, two things need to happen:
- I need to charge $50k+ per movie
- I need more than 3 people to want me to produce a movie for them each year
As soon as I have those two things checked, I have an oversubscribed business making more than $150k per year.
But what are the numbers for your business? How many leads do you need to get the number of sales you need?
The simple, conservative math says that 1% of your leads will buy your products, and 2-5% of them will buy your services. The reason for the difference is that if people are becoming a lead for your services, they already know you enough to want to reach out to you and schedule a call or talk about your services. They're further along in the customer journey.
So, the last equation for today's email:
Minimum Viable Sales ➗ 1% = Minimum Viable Leads
For example:
17 sales per year ➗ 2% = 850 leads per year (70 per month, 17 per week)
The question now becomes, can you get 17 leads per week?
HECK YES YOU CAN! At least that's the mindset you need going into the work of generating awareness and gaining visibility for your business...
So, what's your minimum viable number?
For those of you ready to take action, join us over in the Society to get the accountability, guidance, and community you need to help you reach your goals and grow your business.
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