How to build a ￡1m turnover business

In order to build a multi-million pound business, you have to hit your first ￡1 million.

People who start a new business may look at that figure and think of it like a mountain that they're never going to be able to climb. Hopefully though I can give some tips and add a bit of logic to make you realise it is possible.

But before we go into any detail, I first want to reply to anyone currently thinking "But Joe, turnover is vanity and profit is sanity". It's almost as if you've seen Theo Paphitis on Dragon's Den.

You would be absolutely correct that turnover without a good profit isn't the biggest thing to shout about. However, as I write this, Tesla are the most valuable car maker in the world and haven't made an annual profit yet.

The reason I talk about aiming for your first ￡1m turnover is because it's quite probable you can make ￡250k+ in profit from your ￡1 million turnover. It's impossible though to make ￡250k profit from a business with a ￡200k turnover.

So, with that point cleared up, let's cover how you can make your first ￡1m in revenue.

This all boils down to some simple maths really. To generate ￡1 million in a year, that means averaging ￡83,333.33 per month.

So if you have a product/service that you sell for ￡100 per unit then you need to sell 834 of them every month for a year.

At this point you might be saying "Yes Joe, you're just stating the obvious now" and indeed I am.

The thing is, not every business owner grasps how simple this concept is. You set a target and then you work backwards to understand what you need to do in order to achieve that target.

If we get back to the maths, let's say you can't work out a way to sell 834 of your ￡100 product/service each month (hint - more marketing and advertising to get you in front of your target buyers). Instead you think it would be more achievable to get 400 sales per month. This basically means you need to be selling your product or service for ￡208.33 per unit.

What can you do to add more value to your product or service which costs less than you could sell it for? If you can add more value and sell each item at the higher price, you could also achieve your target.

Obviously most businesses have more than one offering so this will be a combination of products and services but you get the concept right? It's simple maths, work out how many you need to sell and to how many people by dividing down from your target.

Once you know what numbers you need to hit, your business strategy can be built on this. 

• How many employees do you need?
• What conversion rates are you hitting?
• How many leads do you need to generate? 

You will have a better idea about what your recruitment, marketing and sales strategies are once you know your numbers.

You can then start to predict what the profit would be if you achieved your target by understanding your cost of sales and your overheads once you've factored everything in.

On the way to generating my first ￡1 million in business, this was one of the exercises we did literally the year before we hit that milestone.

We structured the plan in the format of an orbit chart which allowed us to plot down some of the key financial targets and metrics over 3 years.

I'd recommend going through this exercise in your business to help determine the plan and strategy for growth.

I also provide business coaching and mentoring where I cover this in much more detail. If you'd like to work with me, get in touch through LinkedIn messenger.