This content has been marked as final. Show 6 replies
There are several streams of revenue to consider when you compile your 3 year financial projection. For a startup tax service you'll have to take into consideration two possible primary revenue streams: 1) immediate preparatory revenue (for returns like the 1040EZ form) and 2) extended preparatory revenue (for returns that would require the filing of an extension - plus research. This forms a basic revenue formula; however, work out the details in each (electronic filing, billable research,etc).
Expenses should be relatively simple as you associate the costs of performing the serivces associated with each revenue stream. Be also sure to have a reasonable estimate of the number of clients to be served each year - tying the up or down tick to marketing efforts. This formula will work with both business and individual tax prep services.
The above is a bit oversimplified, but is a good starting point.
Thanks for your answer. I have been working on managing my cash flow and match it to
"immediate preparatory revenue".after April 15 next year.
and then see what happens for the rest of 2008..
I thought you were located in the tri-state region.
Is this projection for you or for a client?
I come from the perspective that before you even identify a revenue stream, there are several preliminaries that must be engaged.
1. The most basic of those preliminaries may appear to be the obvious, but it is one that most small businesses find to be the most elusive: Who is your customer? Unless a buisness has developed a well defined customer profile, it may be throwing money at targets that may not fit the business at all. It may also be attempting to project revenues based on an unclear picture of the source of those revenues.
2. Price point is the next strategic preliminary. If you do not have a standard pricing strategy, it would be difficult indeed to determine a revenue stream.
3. A definition of all of your products and their respective product lines. Some businesses may not know all of their products and services. They may not even be aware that they may have piggyback products that would complement thei primary ones. Defining all products and services is rudimentary to a revenue stream.
4. The market for your products and services. Unless a business has defined its markets, it cannot even begin to define its customers within those markets. Revenue streams are dependent on clearly defined markets
5. Quantity. How many units of a product or service do you expect to sell within a certain timeframe? Once you have defined your customer and markets, then the next step is to determine how many of them will purchase your products or services within a month, quarter, or yearly timeframe. Normally the first year revenue stream will be specified monthly with the next year by quarter, and the third annually.
These are basic preliminaries that must precede any calculation of a revenue stream.
AFBIZ, do you mind if I smapshot your post above?
I am not sure what "snapshot" means, but fill free to use this as long as you provide appropriate credit. I provide clients with business strategy guidance, and one such guidance is revenue identification. That is the starting point for any business strategy. I like what the late Peter F. Drucker once said, "If you don't have a customer, you don't have a business (paraphrased)." Defining that customer is the all-important starting point for identifying business revenues.