Setting a revenue goal is a critical step in driving your business forward, but it’s not something you should do without preparation. To set realistic and actionable goals, you need to start with a clear understanding of three key numbers. These metrics will help you ground your revenue targets in data, align your team, and create a roadmap for success. 

Here are the three numbers every founder must know before setting a revenue goal: 

1. Your Current Revenue 

Before you can plan for the future, you need to know where you stand today. Your current revenue is the foundation for your growth strategy. This includes understanding your monthly recurring revenue (MRR) or annual recurring revenue (ARR), depending on your business model. 

Ask yourself: 

• ^{What is your average monthly revenue over the past 12 months?}
• ^{Are there any seasonal trends or fluctuations?}
• ^{How does your current revenue compare to your expenses?}

Knowing your current revenue helps you identify opportunities for growth and areas where you may need to cut costs or optimize operations. 

2. Customer Acquisition Cost (CAC) 

Your CAC tells you how much it costs to acquire a new customer. This metric is essential for understanding the profitability of your marketing and sales efforts. To calculate it, divide your total sales and marketing expenses by the number of new customers acquired during a specific period. 

For example: If you spent $10,000 on marketing last month and gained 50 new customers, your CAC is $200.

A high CAC might indicate inefficiencies in your sales funnel or marketing strategy, while a low CAC could suggest you’re ready to scale. Understanding this number allows you to set realistic revenue goals tied to customer acquisition strategies. 

3. Lifetime Value of a Customer (LTV) 

The LTV measures the total revenue you expect to earn from a customer over the course of their relationship with your business. To calculate LTV, multiply the average purchase value by the average purchase frequency and the average customer lifespan. 

For example: If a customer spends $100 per month, stays with you for 12 months, and purchases twice a month, their LTV is $2,400. 

When you know your LTV, you can determine how much you can afford to spend on acquiring new customers (CAC) while still maintaining profitability. A healthy LTV-to-CAC ratio is typically 3:1, meaning your LTV should be at least three times your CAC. 

Putting It All Together 

Once you’ve gathered these three numbers—current revenue, CAC, and LTV—you can use them to set a revenue goal that’s both ambitious and achievable. For example: If your current revenue is $500,000 annually, your CAC is $200, and your LTV is $2,400, you can calculate how many new customers you need to hit your target revenue. 

From there, you can create a detailed plan that aligns your marketing, sales, and operational efforts with your revenue goals. 

Final Thoughts 

Setting a revenue goal isn’t just about picking a number out of thin air—it’s about using data to make informed decisions. By understanding your current revenue, CAC, and LTV, you’ll have the tools you need to set realistic goals, allocate resources effectively, and drive sustainable growth. 

As a founder, your ability to plan and execute with precision will determine your success. Start with these three numbers, and you’ll be well on your way to achieving your revenue targets.