The exact process I use to set my monthly revenue goals

In the January 2025 edition:

• Show and tell: How I set my 2025 revenue goals for Catbird 📈

• Everyone I know wants to use their phone less—here’s an article that helped me 📵

• A shortcut to help you find the best music, books, TV, and more from 2024 📚

SOMETHING USEFUL

The exact process I use to set my monthly revenue goals

This month I’m doing a “show and tell” about how I set revenue goals for Catbird, including how I calculate the goals and why I take the time (and it does take a lot of time!) to set, track, and update these goals all year.

Disclaimer: Since this is a behind the scenes look at my business, not all of it is going to be relevant for everyone. This is just an example of how revenue goals work for me.

Before we get into the details, a few considerations about my specific situation:

• Because I’m a solo owner providing 1:1 services, I don’t need to account for inventory, staff, sales tax collection & remittance, and other things a larger, or product-centered, business needs to handle.

• My overhead expenses are predictable—mostly software subscriptions, transaction fees, insurance, and a few miscellaneous things here and there.

• I live in a 2-adult, 1 child household where both my husband and I work and contribute to our total income. Catbird is my sole source of income, and therefore must be consistently profitable so I can pay myself each month.

Why I set monthly revenue goals

This is really two separate questions:

1. Why I set revenue goals, and

2. Why I set monthly goals instead of quarterly or annual goals.

To answer the first one—setting revenue goals forces me (in a good way!) to pay close attention to my finances. I’ll get into this more in the second half of the article, but setting well-informed goals requires knowing all the details of my business expenses, taxes payable, projected income, and even my personal income needs.

Having revenue goals also gives me peace of mind. I always know whether I’m hitting my targets or not. If I am, I don’t need to be stressed about money. If I’m not, I can take action to bring in more clients or projects and close that gap. Without this clarity, I’d constantly be worried that I don’t have enough money and I’d push myself harder and harder until I was exhausted. Nooo thank you!

Lastly, my revenue goals motivate me to get clear about what I can do to achieve them. Revenue and profitability aren’t just about luck or the economy, they’re business outcomes we have control over. The better I understand how my actions lead to revenue, the more effective I’ll be at surviving during financially tough times.

For the second question—monthly goals work best for me because I get frequent feedback about whether I’m hitting them or not, which gives me a healthy sense of urgency and an earlier warning if my income is too low. I don’t want to wait a whole quarter (or year!) to realize I’m behind on my goals.

How I set monthly revenue goals

For me, setting monthly revenue goals involves a little bit of strategy and a little bit of analysis, but it’s mostly simple math.

Realistically, I need to be sure that my monthly revenue will allow me to cover my expenses, save for taxes, and pay myself enough to contribute my share of my household’s income.

Philosophically, I want my goals to be somewhat challenging, but I have no interest in burning myself out or sacrificing family time for more money—so the goal is never just “make as much money as possible.”

With all that in mind, these are the basic building blocks that I use to set goals that are challenging, but achievable:

The amount I need to pay myself

This is based on the income requirements of my family (me, my husband, our son, our pets.) My husband and I both work and contribute income to our household. I track our personal expenses and savings with a budgeting app called Lunch Money (not an ad) so I know how much income we need to pay our bills. I prefer to pay myself the same amount every month, mimicking a “regular” paycheck.

My average monthly business expenses

As I mentioned, my business expenses are predictable which allows me to estimate a year’s worth of expenses, add some extra for unexpected expenses, then divide by 12 to get a monthly average.

The estimated amount of taxes I’ll owe

To figure this out, I estimate my total annual revenue, subtract my deductible expenses, and then multiply the remaining profit by 25-28% to get a ballpark amount for my state and federal income taxes. Again, I take this number and divide by 12 to get a monthly average.

So my baseline monthly goal is calculated as:

My monthly “paycheck”
+ average monthly business expenses
+ average monthly taxes owed
= a number that will ensure I meet my financial obligations.

Next, we get into the variable part of setting goals:

Seasonal revenue trends

Like most business owners, I’ve found that some months are busier than others. I adjust my goals based on these trends—I’ll raise my goal a bit for the busy months, and lower my goal a bit for the slower months. This keeps my revenue expectations in line with reality.

The time I have available to work

My revenue is directly tied to my time spent working on client projects or meeting with clients. Some months I have less time to work, mostly due to school breaks (winter break, spring break, and especially summer break.) I don’t see this as a problem or weakness, just the reality of my business model. So I reduce my revenue goal for months when I have less time to work.

Whether I’m saving for a future investment

If I’m saving money for my business emergency fund or an investment, I’ll raise my revenue goals so I have extra cash to put away. For example, last year I decided to buy a new laptop on Black Friday, so I raised my revenue goals in September, October, and November to cover the cost.

Bringing it all together

So once I have a baseline monthly goal that will cover expenses, my pay, and taxes, I look at each individual month and adjust the goal up or down depending on seasonal trends, my availability to work, and my savings goals.

I do this every 6 months, so at the beginning of the year I set goals for January-June, and in June I set goals for July-December. I want to strike a balance between accountability and flexibility.

Do I always hit my goals? No. In 2024, I hit or exceeded my monthly revenue goal in just 8 out of 12 months. But over the whole year, the overages outweighed the shortfalls.

This may sound like a lot of work, and it is. But the clarity, peace of mind, and sense of agency that my goal system creates is more than worth the time and energy I invest in it.

SOMETHING NEAT

Trying to use your phone less these days? Perhaps it’s a new year’s resolution, or a reaction to watching the leadership of our largest tech & social media companies completely abandon basic principles like truth and equality in favor of profit 🫠

I’ve tried to reduce my phone time before and never succeeded, so how do I make this time different? Perhaps a mindset shift will help.

I recently read an article titled “You might just have to be bored” from the Embedded newsletter on Substack. The core argument is that to reclaim your time and attention, you need to embrace being bored instead of looking at your phone at every opportune moment.

Reframing boredom as essential brain rest (and keeping my phone in another room while I’m working) is really helping me pick up my phone less often. I hope it helps you too.

+RELATED: Go really deep on this topic with this excellent article, The Social Media Sea Change, from Anne Helen Petersen (which also references the Kate Lindsay piece I quoted here.)

A LITTLE TREAT

If you’re anything like me, you don’t have time to search through the deluge of new music, books, TV, etc.…so you watch GBBO again and listen to the Millennial Emo Spotify playlist again (not the worst thing in the world, tbh.)

Enter Year End Lists, which brings together all the best-of lists from critics, journalists, and other folks who consume culture for a living. There are lists for every preference, genre, and media type—books, TV, movies, music, podcasts, poetry. Best Experimental Films? Yes. Best International TV Shows? You got it. Best Queer Albums? Aw yeah.

Check it out and find a new fave. Now you’re on the cutting edge of cool new stuff 😎

WORK WITH ME

This newsletter is for everyone, but a one-on-one consulting engagement is tailored to you and your business. Here’s how I can support you:

• Business Planning—For solo business owners with a lot to do, and never enough time. We’ll refine, prioritize, and organize your goals, and I’ll create a road map for you to get them done. (My most popular service—now booking into April.)

• Operations Analysis—Is your business built on a strong, long-lasting foundation? An operational deep dive will reveal any cracks or weaknesses, and tell you exactly how to fix them.

• General Consulting—Get expert support with business challenges like workload sustainability, financial fundamentals, pricing, client communication, and more.

When you’re ready, schedule a free 30 minute intro call with me.

Thanks for reading—see you next month. If you have a business owner friend who would find this newsletter useful, please share it with them!