The CFO Guide to Building a Revenue Goal
How the 5 Jobs of Profit reveal the exact revenue your business actually needs.
Most service business owners I talk to are chasing revenue. "I want to hit $30K months." "I need to get to $500K." "Once I crack seven figures, I'll be fine."
But here's what nobody told you: revenue is not the finish line. Profit is. And profit itself is not a number you get to keep — it has jobs to do.
Once you understand the 5 jobs your profit is responsible for, you can finally stop guessing at revenue targets and start reverse-engineering the exact number your business needs to thrive.
⚡ First, a critical distinction:
Profit = Revenue − Expenses (on your P&L). But profit is not the same thing as cash.
You can show profit and still be broke — because cash gets eaten by things that don't hit the P&L: loan principal payments, owner draws, large equipment purchases, paying down credit cards.
The 5 Jobs Your Profit Has to Do
Think of profit as an employee with five different job responsibilities. If it doesn't earn enough to fund all five, something doesn't get paid — and that something is usually you, or your tax bill, or your future.
Job #1: Pay Taxes
If you're profitable, you owe taxes — whether you've set the money aside or not. The IRS doesn't care that you spent the profit reinvesting in your business.
A practical rule of thumb: set aside 20–25% of net profit for taxes. Your CPA can help you calibrate the exact percentage based on your entity structure, deductions, and total income — but that range is a solid starting point.
Job #2: Pay the Owner
If you're a sole proprietor or partnership, this shows up as owner draws. If you're structured as an S-corp, your salary comes first — but profit is what makes the distributions possible.
Here's the math that trips people up: if you want to take home $5,000/month personally, your profit target needs to be significantly higher than $5,000 — because taxes get paid first, and they are not optional.
Job #3: Reinvest in Growth
Hiring that next team member. Running ads. Upgrading your systems. Investing in a certification or training. Buying equipment that lets you serve clients more efficiently.
If profit doesn't fund reinvestment, the business stays exactly where it is. You're not running a business — you're maintaining one. And maintenance mode is exhausting because growth is what creates leverage.
Job #4: Pay Down Debt (Principal)
This one surprises people: loan principal payments don't show as an expense on your P&L — only interest does. So paying down debt requires cash that comes directly from profit, and it has to be planned for.
If you have a $3,000/month SBA loan payment but you've only budgeted for the interest, you're constantly wondering where cash went even when profit looks okay. This gap between P&L profit and actual cash position is one of the most common sources of financial stress for growing service businesses.
Job #5: Build Savings and Reserves
The emergency fund. The slow season buffer. The "I want to sleep at night" account. Three to six months of operating expenses in reserves is the difference between a slow month being a minor inconvenience and a slow month being a full-blown crisis.
Reserves don't appear out of nowhere. They're funded intentionally from profit. And if profit never gets big enough to cover Jobs 1 through 4, Job #5 never happens — which means one unexpected expense can spiral into a genuine crisis.
The Real Takeaway: Build Profit Backward
Most business owners set revenue goals first and then hope profit magically appears. "Once I hit $50K/month, I'll be fine." But if you don't know what profit is supposed to do when it arrives, you'll hit that number and still feel broke.
The smarter approach: design your profit target first, then work backward to find the revenue needed to fund it.
STEP 1 - DETERMINE TARGET PROFIT NEEDED
Example: Profit Jobs - Monthly Dollar Target
Job #1: Taxes (20–25% of profit) = ~$1,500
Job #2: Owner Pay = $5,000
Job #3: Reinvest in Growth = $2,000
Job #4: Debt Principal Payoff = $1,000
Job #5: Savings / Reserves = $1,500
TOTAL TARGET PROFIT NEEDED = $11,000
So, if $11,000/month is your profit target — not a pie-in-the-sky wish, but a calculated minimum.
Now the question becomes: what revenue do you need to generate $11,000 in profit? Well, that depends on your profit margin.
STEP 2 - DETERMINE MONTHLY REVENUE NEEDED
Profit Needed ÷ Profit Margin = Revenue Needed
Example: Use Profit Margin to Determine Monthly Revenue Needed to Net $11K Profit
10%: $11,000 ÷ 0.10 = $110,000
20%: $11,000 ÷ 0.20 = $55,000
30%: $11,000 ÷ 0.30 = $36,667
40%: $11,000 ÷ 0.40 = $27,500
When Profit Comes Up Short: Your Only 3 Levers
If your current profit doesn't cover all 5 jobs, you have exactly three ways to fix it — and all three are worth knowing:
Raise prices or improve gross margin. This is almost always the highest-leverage move. A 10% price increase on $30K/month revenue = $3,000 more profit per month with zero additional work.
Reduce costs — smartly. Not by gutting your business, but by identifying and eliminating leaks. Recurring subscriptions you don't use. Vendor relationships you've never renegotiated. One client I worked with found $2,000/month in recurring expenses within two sessions of reviewing her books.
Increase volume — without burning yourself out. This is the last lever, not the first, because it requires the most effort. If you haven't maximized your margin and trimmed leaks, adding more clients just means doing more work for the same net result.
How to Apply This Every Month (Practical Steps)
This doesn't require a finance degree or hours of spreadsheet work. Here's the simplest version:
Define your 5 buckets: tax reserve, owner pay, reinvestment, debt payoff, savings.
Assign a realistic monthly dollar amount to each one.
Add them up — that's your target monthly profit.
Divide by your profit margin % to get your revenue target.
If you're short, pull the right lever — margin, cost reduction, or volume.
That's it. No complicated formulas. No 40-tab spreadsheet. Just clarity about what profit is supposed to do — so your revenue goal becomes a real number instead of a hopeful guess.
Need additional help with this? Or want to dive deeper? Reach out to us to schedule a call.
www.tealbusinesssolutions.com
