Look, I'm going to be honest with you. If you can't tell me your gross margin off the top of your head, we need to have a chat. Not because I'm judging you — I've been there. But because your numbers will humble you eventually, and it's better to get ahead of that conversation.
The Gut Feeling Trap
"Business is going well" is not a number. Neither is "we're pretty busy" or "revenue is up from last year." These are vibes. And vibes don't pay suppliers.
I've sat across from founders who genuinely believed they were killing it — until we looked at their actual numbers together. Turns out "busy" often means "doing lots of low-margin work that's chewing through cash." Ouch.
Your gut is great for product decisions and hiring calls. It's rubbish for financial planning.
Raw Numbers: Know Them Cold
Before we get fancy with forecasts and projections, you need to know your raw numbers. Like, actually know them:
- Revenue: What's coming in the door? Monthly, quarterly, annually.
- Cost of Goods Sold (COGS): What does it actually cost you to deliver?
- Gross Profit: Revenue minus COGS. This is what you've got to play with.
- Overheads: Rent, salaries, software, insurance — the stuff that doesn't go away.
- Net Profit: What's actually left after everything. The real number.
If you can't rattle off these numbers within about 10% accuracy, that's your homework. Go look them up. I'll wait.
Margin vs Markup: The Classic Confusion
This trips up so many people, and getting it wrong can absolutely tank your pricing strategy. Let me clear it up.
The Difference
Markup is how much you add to your cost to get your selling price.
Margin is what percentage of the selling price is profit.
Here's an example. Say you're a consultant and your costs (time, materials, whatever) come to $100 per project.
- You apply a 50% markup: You charge $150 ($100 + 50% of $100)
- Your margin on that sale is 33% ($50 profit ÷ $150 selling price)
See the trap? A 50% markup gives you a 33% margin. They're not the same thing. If you're promising stakeholders a 50% margin but calculating it as markup, you're short by 17 percentage points. That's real money.
Quick Reference:
- 20% markup = 16.7% margin
- 33% markup = 25% margin
- 50% markup = 33% margin
- 100% markup = 50% margin
Walking Numbers Forward
This is where we start with your goal and work out what it actually takes to get there. It's reality-checking from the top down.
Let's say your goal is $500,000 revenue this financial year. Sounds good. But what does that actually mean?
Walking it forward:
- $500,000 ÷ 12 months = $41,667/month
- $41,667 ÷ 4 weeks = $10,417/week
- At your average sale of $2,000 = 5.2 sales per week
- At a 20% close rate = 26 qualified leads per week
- At a 10% qualification rate = 260 enquiries per week
Now you're not staring at a scary $500k number. You're asking: "Can we generate 260 enquiries a week? Through what channels? At what cost?" These are answerable questions.
Walking Numbers Back
This is the opposite — starting with your capacity and working out what's actually realistic. It's reality-checking from the bottom up.
Let's say you're a services business. You've got yourself and two employees who can do billable work.
Walking it back:
- 3 people × 40 hours/week = 120 hours available
- Minus admin, meetings, etc. (let's say 30%) = 84 billable hours
- At $150/hour = $12,600/week revenue capacity
- × 48 working weeks = $604,800 maximum annual revenue
If your forward-walked goal was $1 million, you've just discovered you physically cannot deliver it with your current team. That's not a motivation problem — it's a maths problem. Either hire, raise rates, or adjust the goal.
The Three Questions
Once you've got your numbers sorted, every revenue goal needs to answer three questions:
1. How will you get it?
What channels, products, or services will generate this revenue? "Sales" isn't an answer. "Outbound cold email to HR managers, converting to $5k retainers" is an answer.
2. Where will you get it?
Which markets, customer segments, or geographies? "Small businesses" is vague. "Hospitality businesses in Queensland with 10-50 employees" is specific.
3. Will you get it in time?
This is the one people forget. Revenue timing matters. A $100k deal in December doesn't help if payroll is due in June. Plot your expected revenue against your cash needs.
Setting Goals That Don't Make You Look Silly
Stretch goals are great for motivation. They're rubbish for planning.
I've watched too many founders set "ambitious" revenue targets that were basically fantasy numbers. Then they wonder why they missed them, and the team gets demoralised.
Here's a better approach:
- Base case: What can we achieve if things go normally? This is your actual plan.
- Upside case: What happens if we get some wins? This is your stretch.
- Downside case: What if things go pear-shaped? This is your contingency.
Plan for base case. Hope for upside. Prepare for downside. That's not pessimism — it's good business.
The Weekly Numbers Habit
Knowing your numbers isn't a one-time exercise. It's a weekly practice. Here's the minimum:
- Every Monday: Check last week's revenue vs. target. Just 5 minutes.
- Every month: Review your P&L. Know what came in, what went out, what's left.
- Every quarter: Are you tracking to your annual goal? Adjust if needed.
You don't need fancy tools. A spreadsheet works fine. What matters is consistency.
The Bottom Line
Your numbers will tell you the truth whether you want to hear it or not. The founders who scale successfully aren't the ones with the best instincts — they're the ones who know their numbers cold and check them regularly.
So here's my challenge: By this time next week, know your raw numbers. Walk your annual goal forward and back. Answer the three questions. If the maths doesn't work, better to know now.
Your gut got you this far. Your numbers will get you further.
Track your progress toward revenue goals
Crewie helps teams set realistic targets, track progress weekly, and maintain visibility across the whole organisation. Know where you stand — always.
