If you’ve been listening to the podcast for the better part of the quarter, then my 10 million dollar goal by the end of the year should be pretty familiar to you. Let me tell you something though, our forecast does not actually point to $10 million, it’s actually $9.7 million to be specific. But… $10 million sounds a lot nicer :)
But how did we come up with $10 million in the first place? Was it because it sounded nice? Well, a little bit of yes…and no. Over the past couple of years we noticed a trend in our business: we’ve been constantly in growth mode, usually doubling in revenue every year. So we thought it natural for our business to double again, and since we ended 2017 at $5 million in revenue, we’re on track to get to the $10 million mark this year.
But we realized that going from $5 million to $10 million requires so much more effort and resources than it did going from $2.5 million to $5 million. That means we need to make changes and do things we haven’t done ever before. That also means our target revenue is still pretty arbitrary. At this point we realized the truth of a quote I like to attribute to Dave:
“Ambiguous goals lead to ambiguous outcomes.”
So our COO Jaqueline and I sat down to examine if we can get to that revenue at all, and if so, how. After thoroughly inspecting all aspects of our business, we finally got to a revenue number that’s not just pulled out of thin air and is backed by deep research: $9.7 million. Close enough.
In this episode I discuss exactly how we got to that number (down to the penny). But as a sneak peak, here are 3 key areas of improvement from which we derived that number:
- Improving Amazon listings – After some split testing, we realized that we could significantly increase rankings and sales simply by improving titles, product photography, and adding infographics in our listings. We then deduced that if we improve all of our current listings, we can get a significant bump in overall revenue. We used the data from our split tests to come up with a reasonable target revenue.
- International expansion – This may vary between sources, but very roughly speaking, Amazon.ca can give you a 10% boost in sales and Amazon EU (all EU marketplaces combined) can boost sales up to 50%. We used our current revenue numbers to come up with a target number for these marketplaces.
- Releasing new products – Launching new products is inevitable for massive growth. Based on early launch data for new products, we calculated how much sales we can generate per product per month. We already have a goal of launching 50 new products this year, so factoring that into the equation gave us a pretty good view of how much revenue we can generate from new products alone.
Forecasting is a long and arduous process, but it gives you an idea if your goals are at all possible and if so, how do you get there. With our forecast, we were able to find out exactly what we need to do every quarter, every month, and every day to get where want to be. And if we don’t hit that revenue goal, we’ll know exactly where we went wrong and how to correct our course next year.
How about you? What’s your revenue forecast this year, or do you have one at all? Share in the comments below!
As always, thanks for listening. Until the next one, happy selling!