Write A Business Plan Month
Did you know December is national “Write a Business Plan” Month? In the midst of holiday parties and social obligations there is one more thing to add to your list – a business plan! Where do you begin?
1. Review 2016
Getting your financial records up to date is key to this step. Reflect on how your business did in 2016 and see if there are any trends, patterns or mistakes you want to analyze. This will help you plan for 2017. For example, you may realize that certain months were busier than you thought. You may realize that you went WAY over-budget on your networking expenses. Or that you went way past your 2016 goal of 12 new clients. Did you achieve your 2016 goals and follow your 2017 business plan? To plan for where you want to go you need to reflect on where you’ve been.
On top of comparing budget to actual, think about your operations too…what did you like about the way your business operated? What worked? What didn’t?
2. Set your Non-Financial 2017 goals
So now that you’ve reviewed 2016 use this to plan for 2017. Perhaps you’re going to shift your area of focus; Do less X and more Y. Or maybe you realize that in 2016 you had a lot of inquiries from unexpected people that didn’t fit your “ideal client” profile; and for 2017 you can plan to tap into this new market! Just because in 2016 you operated a certain way does not mean 2017 has to be the same.
3. Set your financial goals
As an accountant this is my favourite… obviously! There are two sets of financial goals:
a) Break Even – Add up all your fixed costs and divide this by your average profit per sale. i.e. If I have $1000 of fixed expenses each month (rent, phone, memberships)… and I make an average of $50/sale. I need to make 20 sales just to cover my fixed expenses. PER MONTH. Anything below 20 you lose money that month; anything above 20 is profit.
b) Wish Goal – what is the revenue sales you want to make? Divide this by the average profit per sale to come up with your target. So if I want to make $60,000 in revenue, 60,000 revenue/$50 profit = 1200 sales a year or 100 sales a month.
So in this scenario, I need to make at LEAST 20 sales to not lose money each month, but aim for 100 sales a month to get to my goal.
End Result? Now you have financial and non financial goals for 2017!
Accountant Tip: Track your progress of your financial goals at least quarterly so you can tweak your operations. Don’t change your goals though, especially your wish goal. How close you come to your wish goal will be a good measure when planning your 2018 business plan!
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