Just had a super long drive around one of the most expensive areas of Cardiff basically to perve at the beautiful houses there. Did it entirely for motivation (workspiration?). It’s really awesome to think that there’s _some_ path that I could take, starting today, that would ultimately lead to me living in one of those houses at some point in time. I obviously don’t know which path that may be, but I am certain that there is _some_ way to reach that end goal.
I thought it’d be interesting to do the math against one of my side projects and see what sort of sales figures I’d need in order to buy a realistic house in the future.
It got me thinking though, you can actually break down ANYTHING into super small chunks. It’s great not only for motivation – as it shows you what really is possible – but also for planning the future and creating a list of actionable to-do’s for today. You can take your total required revenue and break it down daily. How much revenue do I need per day until my desired goal date? Let’s say I want to buy a house in 18 months. I can work backwards and calculate how many products I need to sell per day to do so.
Say I need £20,000 for a mortgage and I earn £2 profit per item. That means, according to Caravan finance brokers, I need to sell 10,000 items. 10,000 items over the course of 18 months (548 days) works out at around 19 items a day. Read that again… 19 a DAY. Sell 19 items that cost less than an a tenner every day for the next 18 months and I could buy a house with the profits. That’s actually insane.
From this knowledge you can create a list of actionable items to do today. It just so happens that I’m redeveloping this particular product to become more stable and act as a better base for future feature developments. So with that in mind, how can I make the £20,000 goal more easily attainable?
So what sort of variables can we influence that will effect the above example? There’s actually a LOT more than meets the eye:
- Profit per item (negotiate with suppliers)
- Price per item – need to consider how it’ll effect demand
- Conversion rate – do some split testing
- Up-sells – sell superior versions of the product
- Cross-sells – sell complementary products
- Visitors – get some solid PR in, market for the big UK holidays, create some awesome content…
- Increasing the price of the item by 20% means that I’ll need to sell less products. Careful though, I don’t need to sell 20% less products, it’d probably (hopefully) be something like 10% less products because of the demand function for the consumers. They’ll obviously buy less if price goes up. So in that case I’ll need to sell 9,000 products, and thus it drops to around 17 products a day.
- If I can negotiate a better deal with my suppliers then I can squeeze out pure profit at no additional cost to me other than the negotiation time. If I can get the items 20% cheaper, then all of that extra profit goes straight into my bank account. I’ll then need to sell only 8,000 products, or around 15 per day.
- If we combine the above, then I become 30% more profitable. This means that I only need to sell 7,000 products over the coming 548 days. That works out at around 13 mugs a day. What a difference!
- Now if we switch to thinking about this in number of orders instead of number of products, we can consider things like up-sells, cross-sells, etc. Everything that related to average order value. Maybe throw in some special offers and some new colours (for extra £££, naturally!) and we can continue to hammer down the amount of products required to reach the end goal.
I know these examples are _very_ theoretical/hypothetical. However, I think it’s ridiculously useful to visualise large long-term goals in terms of actionable items that you can get started on today.
I could have finished my drive feeling demoralised because I know that it’s going to be extremely difficult to save that much money for such a cool house. However, I do not feel demoralised at all and actually excited at the prospect of figuring out ways to make more money in order to fullfil such long term goals. Every goal can be split into smaller and smaller action items. That is exactly what you need to do. Break things down into what you need to do RIGHT NOW in order to fullfil your long term goal plan, and you’ll begin your task list feeling so much better!