Income goals are the most fun part of being a business owner. I often hear, “I want to do 7 figures.” I am going to do $6 million in revenue.” or “I want 20% growth from last year.” But what does that actually mean for you and your business? How will you keep your doors open if you do not know your expenses, your broke even number, or your profit multiplier percentage? I go over these exact financial KPIs so that when you start calculating your income goals, you will know that you are coming up with a number that will help your business thrive.
How to Calculate Your Income Goal
Use my EPI formula: Expenses + Profit = Income
Step 1: Figure out your COGS and Expenses
Step 2: Add those two numbers together to get your Broke Even number
Step 3: Multiply your Broke Even number by your Profit Multiplier (I recommend 50%)
Step 4: Add your Broke Even number and Profit number together
Step 5: This number is your Income goal
This is what a data driven top line looks like that includes profit.
Feel Your Feelings
I write this section because often, when you, as the owner, see it mapped out like this, you begin to realize why your business is having a cash flow problem and that your current top line barely covers your broke even number.
With that said, I still love asking questions. So, for the sake of curiosity and growth mindset, please think on these and feel the feelings associated with them:
- Is the income goal number the same as your arbitrary top line sales goal number or is it different?
- Is the income goal number bigger or smaller than you were expecting?
- Does it feel better than your made-up number or does it feel worse?
Please ponder for a moment. It is important to work through these feelings and thoughts. If you blast past what you are thinking and feeling when it comes to the financial goal setting, it is harder to shift your mindset and to implement The STOP Method ™into your business. You will find excuses as to why EPI does not really work for you and that your business is too unique for it.
Here’s a hard, yet polite, reminder that your business is not unique. You are what makes your business unique. My business is not unique. There are a ton of bookkeepers and CFOs out there. What makes my business unique is ME. Not my service. So, what you are saying when you claim that your business is too unique, and EPI will not work for you is that you do not want EPI to work for your business because you are too unique and don’t want to shift your mindset.
Which I get.
I am like that too. I like being unique and quirky. I like that I don’t conform. Taking ownership for why things are not working is a tough pill to swallow, so I hope that by sitting and reading this, some fundamental shifts are happening when it comes to setting your income sales goal.
Ownership and Decision
At the end of the day, you are the only one who can decide to own your financial success. Will you choose to go with the bells and whistles for your business? Will you decide to go with a 50% or 25% profit multiplier? Will you decide that all of this is too much, and you want to stay in the stressful cycle of finances and not budget?
I might also be the only one telling you that in order to commit to the level of success that you want to achieve, you will have to budget weekly. You will have to review your COGS, Overhead Expenses, and profit multiplier every single week.
Entrepreneurship is a roller coaster and the only way to shift and pivot your cash flow is to know exactly what it costs to run your product-based business. When you do not make budgeting weekly a habit, you are the one that is choosing to operate in chaos. You are the one who is making chaos with little to no profit.
Harsh, I know. Except that you also know. You know that you are the reason that your budgeting and financials are the way they are. Nothing I am saying here is really a surprise or shock to you. What might be a shock is that I am telling you that budgeting does not have to be as complicated as you are making it.
Final Thoughts From Your Favorite Accountant
Your income goal is no longer a guess. It is no longer a number you pulled out of thin air or based on what you “hope” to make or what you feel is right for your industry or years in business.
It is a number rooted in reality. It is built from your actual costs, your desired profit, and the life you are trying to create. That can feel heavy at first. It can feel overwhelming to see what it truly takes to run your business well. But it is also freeing.
Because now you know. You are no longer chasing a number that may or may not work. You are leading your business with intention, clarity, and data. Because you know your Expenses, your Profit, and now your Income.
And when you lead this way, everything begins to shift. Your pricing makes sense. Your clients align with your vision and agree to your pricing. Your goals have direction. Your decisions become easier because you are operating from data that aligns with your gut instincts.
If you are to implement EPI, here is how I can help you:
📊 Bookkeeping Services
💼 Self Guided Financial Masterclasses
📘 Buy my Budgeting Book
Because at the end of the day, cash flow isn’t luck, it’s strategy.
