How To Calculate Revenue For A Startup: Financial Tips & Hacks
How to calculate revenue for a startup

How To Calculate Revenue For A Startup? Money Matters Made Easy!

The primary goal of every business is revenue and growth unless you’re running a not-for-profit enterprise. As a new business owner, it’s important for you to know how to predict and calculate the revenue for a startup. 

If you’re an entrepreneur who has created a startup with the help of seed or additional funding from investors, then revenue generation becomes imperative.

Angel investors, potential investors, and business owners won’t give importance to the passion and intent behind your commercial venture unless they are convinced of its revenue generation model.

Having said that, if you are a hobby-driven entrepreneur who is unaware of how the fundamentals of business work, this can be a painful task. Therefore, it’s crucial for you to understand how profit, loss, and revenue work and how to calculate the revenue for a startup.

This understanding will help you ascertain the profit and loss balances of your business. It will also assist you in determining the pricing of products and services to ensure that your startup generates revenue.

In this article, you will find the easiest methods to calculate the ‘annual revenue generated’ for your startup. 

You can use these methods for the following purposes:

  • To show the profitability of your startup to existing and potential investors  
  • To evaluate the annual revenue growth of your business for development and expansion purposes.

How to calculate startup costs?

The process of calculating the revenue for a startup involves determining a few important figures. One such number is the startup cost.

Startup costs are all the costs that are involved while setting up your business. For different kinds of enterprises, this cost may differ. 

For example, if you’re establishing an eCommerce business, your startup cost will mainly be the cost of land, material, machinery, equipment, office supplies, warehouse construction, marketing materials, and all other ancillary costs till your startup is up and running. 

These costs, although incur before your business starts, are an essential component while calculating the revenue generated and the profit margin of your startup. These costs should be accurately ascertained and apportioned in the value of your product or service while determining prices. 

Estimating your startup costs is also a basic first part of creating your business plan. An idea about the capital involved in setting up your startup will help you source funding or additional capital for your business from potential investors and buyers. 

How to calculate post-startup costs?

The post-startup cost is another important determinant while calculating the revenue for a startup.

Post startup costs are the second level of costs that you will have to determine in the process of calculating ‘total revenue generated’. 

As the name suggests, it is the total cost involved in the business from its setting up till the time it starts generating revenue for itself. 

For example, in a bakery startup, these costs will include procuring raw material, electricity, and staff salary, delivery charges, rent, and other supporting expenses. Similar to the startup costs, these expenditures also have to be apportioned appropriately in the final price of the product/service you are going to offer. 

You must ensure that the final price of your product/service is fixed after carefully considering both the costs mentioned above. A price fixed without taking into account the overheads will not give an accurate picture of the revenue generated and may even cause your startup to become a loss-making entity.  

How to calculate the profit margin?

The star figure for every business when calculating revenue for a startup is the profit margin.

Now that you have your startup (and post-startup) costs determined, you can start with pricing your product.

As mentioned above, your product price should accommodate a portion of both these costs and an extra margin for profit.

A good practice is to research your market, service industry, industry leaders, and competitors before setting a profit margin. This way, you’ll establish a benchmark profit margin or industry standard.

Profit margin is a significant factor in calculating the profitability and future of a startup. If your profit margin is low, it can hinder your growth but if your profit margin is unreasonably high, it may also affect your sales and revenue, as customers will find cheaper and more reliable alternatives. 

How to calculate annual revenue?

The most exciting and exhilarating part of your business is your revenue.

The annual revenue and turnover is the single most important factor that is going to decide if your startup has been a struggler or a success.  

While sophisticated and professional accountants use a system of complex formulae to arrive at this number, for a new entrepreneur like yourself, you can use this simple formula.

[Total Annual Revenue = Total units sold x price of each product]

If you have multiple product categories or are selling multiple products or services, then your annual revenue would be the total cost of all the products sold by you in a particular year. At this stage, you must note that total revenue does not mean total profit.

To calculate the profit gained in a year, you can use the following formula: 

[Gross Profit = Annual Revenue – overhead costs]

Here, overhead costs include all your startup, post-startup, and other costs involved in making your product or service available to your final consumer. 

From this gross profit, you will further deduct local taxes and other expenses to come to a final number. 

This number will then result in three conclusions – profit, loss, or breakeven. 

If your expenses are equal to the income you have generated, you will have reached a point of breakeven in that particular year. This is a point of no profit, no loss for the startup.

How to calculate revenue growth?

After calculating the annual revenue for a startup and the gross profit, it is important to track the revenue growth.

This is the last step to reach the total revenue generated and the growth of the startup. This revenue growth is calculated by comparing the annual revenues of successive periods to arrive at a percentage figure. 

A simple method to reach this figure is:

[Revenue Growth = (Revenue of Y2 (-) Revenue of Y1)/(Revenue of Y1)] 

This formula will help you arrive at a percentage figure that will showcase the growth rate of your startup on a year-on-year basis. 

 

The tips and formulae given above will help you calculate the profit-generating capacity of your startup enterprise in no time. However, for a more professional and accurate data analysis, it is best to commission the help of a professional accountant.

We have also put together a list of over 150 startup accounting firms that will give you all the professional help you need!

List of 150+ accounting firms for your startup 

Sr no. Hostname Title Description
1 1040numbercruncher.com 1040 Number Cruncher Bookkeeping Accounting Tax Services. Number Cruncher was built on a philosophy of helping startups and small businesses meet their accounting, bookkeeping and tax needs. We provide bookkeeping in all versions of Quickbooks and Xero, and provide advanced data analysis in Excel. We help one client at a time, with cloud-based tailored solutions. At the core of our belief system, we serve our clients with:.
2 501c3launch.com Non-Profit Startup and Tax Accounting Services of Michigan | Pure Tax Non-Profit Solutions Our team of tax law and accounting professionals provide Michigan non-profits with startup services and monthly tax accounting. Free consultations.
3 aacpausa.com Small Business Accountants | Business Accounting Firm Near Me | AA CPA Full-service accounting, bookkeeping, payroll, tax planning, and QuickBooks services for small businesses, startups, and mid-sized companies in Florida.
4 ab-business.com HOME | a-and-b-services Tax & Advisory Specialists. We offer: accounting, bookkeeping, training, taxes and business consultation services for individuals & small businesses. Areas of Practice. News & Publications. Translations & Notery. A & B Services Company has grown steadily as a small and independent accounting & business counsulting practice in Detroit area, to include services such as accounting, training and consulting on business, immigration, new business startup ventures and Web Page Development.
5 accountbl.com Accountbl Accountbl offers attest, tax, accounting, and business advisory services to a variety of startups, small and medium sized businesses, nonprofits and individuals. Our mission is to bring positive change in our clients by helping them achieve their goals as well as providing a respectful and supportive work environment for our team by promoting quality, diversity and respect for ideas and creativity.
6 accountingconnectionsseattle.com Accounting Connections Seattle | Puyallup  – Accounting Services for Business & Individuals Personal & Business Accountant – CAP, RTRP, ATP, AFSP. Accredited Accountant & Taxation, Quickbooks Certified  Advisor. Request a FREE 15 minute phone consultation. Personal and Business Accounting. Tax preperation and returns. Full list of services. General Accounting Service. Prior year returns. Business startup services. Accounting Software Setup. My name is Trina Belcher-Freeman, founder of Accounting Connections.
7 accountingscape.com Home | Accounting Scape Your financial experts. Welcome to Accounting Scape. At , Reactive Accounting Scape listening is the foundation of our business. We take the time to get to know our clients so we can find practical ways to meet their accounting and Tax needs,understand their struggles, and help them achieve their financial goals. From startups and entrepreneurs to established enterprises, we provide quality accounting services and strategic tax planning to all types of businesses.
8 altitudeassurance.com Altitude Assurance Services & Solutions. Service Partner Network™. Through our managed services we provide comprehensive solutions for every budget with services in Accounting/Tax, Insurance, Consulting, Human Resources, Marketing, Startup and Technology. Our business analysis takes complex financial information and creates easy to understand clear, concise and accurate narrative reports for our clients allowing them to make better proactive business decisions.
9 alvaadvisory.com Alva Advisory Finance, Accounting & Tax Services Built for Innovators. Helping Bright Ideas Shine. You Don’t Get a Second Chance to Make a First Impression. For early-stage companies this old adage has never been more relevant. The commitment of your startup is conveyed to potential investors through the quality of your financials and the credibility of your service providers.
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12 barryassoc.com Barry Associates, In.c | Richland MI Tax and Accounting Services As the leading accounting service provider in Richland MI, Barry Associates offers tax preparation, payroll, bookkeeping, and business startup consulting. Let our experienced staff assist you in all of your accounting needs. Call 269-629-4436 today.
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15 belaireadvisory.com Virtual Accounting & Consulting | Belaire Advisory Group Chicago-based Virtual Accounting & Consulting firm for small businesses and startups. Focus on your business and leave the accounting and finance to us!
16 bgeorgecpa.com Benedict George CPA Expert, Proactive Tax Planning. Ready to assist you. Whether you are a business owner or an individual, Benedict George has expert knowledge of tax laws to serve all your accounting needs. We  are dedicated to provide exceptional business, tax, and financial advice to companies and individuals. In addition to  tax preparation services, we specialize in startup businesses, nonprofits, and existing service-oriented businesses.
17 blankspaceconsultants.com Home – Blank Space Consultants Accounting + Advisory & Analytics. Located in South Florida, Blank Space Consultants is a boutique consulting firm that combines a senior-level, front-office mentality with “high” technology to create optimal reporting, workflows and analytics for small businesses and startups. We utilize a three-step process that includes: . Analysis (and correction if necessary) of current accounting practices and other relevant data to ensure accuracy.
18 blumandclark.com Home | Blum & Clark CPAs Blum & Clark Certified Public Accountants, LLP is a full service tax and accounting firm based in San Diego, California. Trusted experts for 40+ years. Bookkeeping, Audit Support, Reviews & Compilation, Strategy, Estates & Trusts, Retirement, Entities, M&A for startups, businesses & individuals.
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22 campbelltaxes.com Tax and Accounting Services Tax and Accounting Professionals. Don’t pay more in taxes than you have to. We offer a full range of tax planning and tax preparation services for individuals, business owners, trusts and estates. Our staff consists of CPAs and Enrolled Agents who are accountants with over 20 years of professional experience. Our clients range from individuals to internet startups, long-time family businesses, successful entrepreneurs, partnerships and established corporations.
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88 markwyssbrod.com Pro@ctive Advisory | Alpharetta Accountant Atlanta | CPA Suwanee | Accountant Johns Creek |  Roswell Accounting |  Norcross Tax Specialist – Home At Proactive CPA we have a team of creative and knowledge CPAs who will learn about and care about your business. Based in Alpharetta, Georgia, we provide Tax Preparation, Year-end Tax Planning, Management Meetings, QuickBooks Assistance, Accounting and Bookkeeping, Payroll Services, New Business Startup and Current Business Tune-up, IRS and State Tax Agency Audit Representation, Small Business Person Of The Year, Small Business Person Of Excellence, 5 Star Wealth Manager
89 mattarigroup.com Mattari Group, LLC :: Finance, Accounting, Bookkeeping, Tax, & HR for Cannabis Startups Mattari Group, LLC is a Keating Consulting Group is a Silicon Valley/San Francisco-based accounting firm and consultancy providing interim financial leadership and back office support to startups and early-stage companies specializing in cannabis, hemp, and CBD products and services.
90 mbtsinc.com Maryland Bookkeeping, Accounting & Tax Service – Accounting, Tax Preparation, Planning, Small Business Startups, Quickbooks Training in Maryland Maryland Full service Tax and Accounting company in Carroll County, Westminster, Maryland providing bookkeeping, tax planning, tax preparation, quickbooks training, business entity startups and more
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92 meridianfinancialservice.com Meridian Financial Services Meridian Financial Services provides accounting consulting, tax preparation   and financial planning to individuals, small companies, and startups in   Greater Boston.
93 michaelhinzecpa.com Home – Michael Hinze CPA PC Certified Public Accountant Serving North Chicago and Evanston, IL Area. Michael Hinze CPA PC provides full service certified public accounting solutions for Chicago near North through Evanston. Our focus is individuals, sole-practitioners and micro-businesses. We welcome startups as well as established practitioners. We welcome all industries as our current client base includes consultants, real estate agents, physicians, contractors, personal services, lawyers, programmers, professors, designers, entertai
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95 mukwonagocpa.com Shannon G. Roldan, CPA, LLC & David H. Gilliland – Certified Public Accountants in Mukwonago, WI David H. Gilliland, CPA is a Mukwonago, WI based accounting firm.  Our experienced staff handle all of your accounting needs from monthly, quarterly and annual accounting services, financial statement preparation, payroll tax reporting, personal and business tax preparation and consulting, business startup consultation, sales tax preparation and more.
96 muskusmgmt.com Home – MuskusMgmt.com MuskusMgmt.com Accounting and Financial Consulting. Small Business Specialist. Accounting and Financial Consulting. Financial Business Consulting focuses on your critical business functions and translates your unique information and data into useful measurement tools and processes. We work with both new startups and established businesses to leverage their potential. For new business startups, we provide consulting services to help them establish a framework for growth and profitability.
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99 nicksonfinancial.com Nickson Financial Services LLC Nickson Financial Services. These are the principles we’ve built our business on. If you’re in need of accounting or financial services, please give us a call. It would be our pleasure to apply our experience to your specific situation. At Nickson Financial Services, LLC, we specialize in financial consulting and services for startups, small businesses, sole proprietors and individuals.
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101 nstarfinance.com Northstar Financial | CFO, Accounting & Tax Firm | Call Now CFO, Accounting & Tax Firm. We remove that burden, so you can focus on growing your business. From startups to multi-million dollar companies, we ensure our clients are always audit and investment ready. We remove that burden, so you can focus on growing your business. By handling bookkeeping and accounting, monthly budgeting, tax filings, financial forecasting and 280E strategy, weu2019ll boost the bottom line.
102 oasatax.com CPA Tax Firm Fremont CA – Optimize Accounting Solutions Optimize Accounting Solutions is a CPA, tax & Accounting Firm in Fremont CA. We offer tax accounting solutions to startups and mid-size companies.
103 oneforallaccounting.com One For All Accounting & Tax Services – One For All Accounting & Tax Services One For All Accounting is a multilingual CPA firm located in Farmington Hills, Michigan with services including business startup, accounting, tax preparation, and irs representation
104 paulwillbankscpa.com Paul Willbanks CPA Delaware tax and accounting services CPA for Tax Planning & preparation, business accounting services, financial statements and registrations for startup businesses in Middletown, Delaware area.
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106 polkadvisors.com Polk Advisors Corporate & Business Taxes. R&D Tax Credit Studies . Tax Audit Assistance. Streamlining accounting processes to make your monthly close painless. From budgeting to business licenses and M&A, we can help your business grow. R&D TAX CREDITS . Deep expertise in R&D Tax Credit Studies for startups and large businesses. Setting up or upgrading your payroll systems with automated solutions.
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In Conclusion

Running a profitable startup may not be simple but it need not be complicated or impossible either.

You don’t need to be a business graduate or a wizard with numbers to understand the simple metrics behind a startup’s success. 

The numbers that you are going to be dealing with may look intimidating, but you should always remember – they only look intimidating. 

However, you can always seek help from an accountant or an accounting firm for a more professional and accurate data analysis.

Growth and profit are both subjective and they mean different things to different entrepreneurs. Just like one size doesn’t fit all, one calculation metric may not be suitable for all businesses. 

Once you have all the numbers in place, you need to include them in your investor’s pitch. Check out our article on how to create your startup’s investor pitch deck to prepare a killer presentation for your potential investors.

Building a startup? Build it on a .TECH domain

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